Fannie Mae program may help those with low credit scores
It’s definitely a home buyer’s market.
Sellers want and need to sell their homes and they are ready to deal.
But before you go out and strike that great deal on the house of your dreams, make certain you have your financing ready to go.
Sellers will make better deals when they are certain you are pre-approved for financing.
If you have saved up for a down payment or if you’re using the equity from the sale of your existing home, you’re in a good position.
With a maximum loan amount of $417,000, "My Community Mortgage" provides near conforming rates and up to 100 percent financing for borrowers who normally would not qualify for excellent credit score programs.
The home buyer may choose from either 97 percent financing or 100 percent loan to value.
The first option allows for a small down payment, for those borrowers who have it and no down payment for those buyers who only have the cash to close the deal.
The seller can contribute up to 3 percent of the purchase price toward the buyer’s closing costs.
These funds can be applied to anything on the buyer’s side of the settlement statement including pre-paid items like home owner’s insurance and taxes.
Some local down payment assistance programs are eligible, but buyers wishing to use these sources should consult with their mortgage provider to see if they qualify.
Obviously better credit scores are easier to qualify for such an aggressive loan program.
My Community Mortgage does not allow for any bankruptcies and all collections, judgments and liens must be paid prior to closing.
Self-employed borrowers are allowed to utilize this program and may submit two years’ worth of complete tax returns to verify income.
There are income restrictions calculated on a county-by-county basis.
Escrows for home owner’s insurance and taxes are required for loan amounts that exceed 80 percent of the purchase price and when the loan amount drops below that 80 percent mark, escrows are no longer required.
All of these facts point the way to an attractive loan product for home buyers with limited credit.
Interest rates for this product are only slightly higher than conforming rates and much lower than sub-prime loan products.
It remains a buyer’s market and now there is a buyer’s loan product to match.
- Summarized from: Fannie Mae program may help those with low credit scores, by Trey Bowden, The Edmonton Sun, Aug. 19, 2006
