GUEST AUTHOR: Bob Chiodo
Equity Home Mortgage, LLC
Many counties offer the American Dream Downpayment Initiative (ADDI). This is a program that will “give” the buyer money that can be used for down payment and costs. These amounts vary by county and come with the typical income restrictions and education requirements. The “gift” is usually in the form of a second mortgage that doesn’t require any payments. You pay the loan off when the property is sold – without any interest charges. Sometimes, the loan will be completely cancelled under the right conditions. These types of programs are great but do require that the potential home buyer takes the time to research them and make sure the requirements are fulfilled.
To wrap up the decision on first-time programs, we should cover a little about normal conventional loans. These are called conforming, convention, Fannie Mae and/or Freddie Mac. These are your typical standard mortgage products. Althought these require some form of mortgage insurance and have been greatly restricted due to the market changes, they are definitely viable products to assist first timers. To be competitive, these products will require good credit scores and 3% down. Like the FHA loans described above, the down payment can be in the form of a gift. You might be surprised that – with good credit and a decent financial profile – these programs can be aggressive in the debt-to-income requirements.
So, now what do you do? Obviously there are a lot of good financial products out there to assist buyers in today’s market. And, yes, the information can be overwhelming. The best place to start is to sit down with an experienced mortgage professional – someone who will take the time to educate you on the loan process and the various loan programs. Being educated on the other basic financial aspects on buying a home is also important.
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Betty Jung
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