Home Loan Programs
Special Program Types
The two main types of special programs used to assist a home buyer in the financing of their home are Government Programs and Lender Programs. Many of these programs are based on the Community Reinvestment Act (CRA) while others are simply programs put into place to further home ownership in designated neighborhoods or to meet the needs of specific group of buyers.
Most of the CRA programs have strict requirements including setting a maximum family income, a maximum selling price, a minimum number of years that has lapsed since any previous home ownership, specific guidelines restricting the area or neighborhood of the home purchased, and you must use a lender or loan broker who is approved to originate these programs. Of course, Nationwide Realty Services is approved for most of these programs. Other programs do not have these restrictions and can be used by anyone who is knowledgeable of the programs and who is willing to put a package together for a potential home buyer Unfortunately, this eliminates most of the lenders out there who simply want the to originate the quick and easy home loan.
Special Program Types
Below is a listing of just some of the programs we use every day to help a first time home buyer qualify for a nicer home with less money down and/or lower payments. For further details on these programs including restrictions and limitations, or to explore other programs, please Contact Us and we will be happy to discuss these and other options with you.
Lender programs designed to lower the up front cash requirement of a home buyer These programs can involve just one loan or multiple loans (a 1st Trust Deed and a 2nd Trust Deed) and may even involve using multiple lenders for each loan. Working with a Mortgage Broker allows the use more than one lender for your transaction and get the best terms for the 1st Trust Deed and then use another lender and get the best terms on the 2nd Trust Deed.
California Housing and Financing Agency Programs are typically funded by state bonds approved in general elections held in the State of California. There are a variety of programs mostly designed for First Time Buyers, Low Income Borrowers, or Moderate Income Borrowers. These programs offer easier qualifying, low down payments, low closing costs, and even Silent Seconds.
California Department of Veteran Affairs programs which offer below market interest rates with low or no down payment that increase your purchasing power and keep your payment down. They have expanded eligibility so that nearly any veteran wanting to buy a home in California is eligible. They currently have funds for all qualified wartime era veterans, regardless of when they served in the military. They also have funds available for peacetime veterans who qualify as first-time home buyers or purchase homes in certain target areas.
Community Home Buyers Program sponsored by the Federal National Mortgage Association (FNMA), commonly referred to as Fannie Mae. This program offers a low down payment and easier qualifying home loans for First Time Buyers. This program can be used in most areas throughout the country.
U.S. Department of Housing and Urban Development Programs that can be used by most borrowers in most areas throughout the country. These programs offer lower down payments and easier qualifying than other conventional loans. FHA programs can often be combined with other programs to create very effective financing packages.
Federal Home Loan Mortgage Corporation (FHLMC) commonly referred to as Freddie Mac is an agency that purchases conventional mortgage loans from lenders. FHLMC and FNMA together make up what is know as the Secondary Market. Although it does not originate any loans, by purchasing home loans originated by lenders, it frees up more money to be used by those lenders to originate more home loans. These loans must conform to FHLMC standards which is why they are called Conforming Loans. FHLMC programs can often be combined with other programs to create very effective financing packages.
Federal National Mortgage Association (FNMA) commonly referred to as Fannie Mae is an agency that purchases conventional mortgage loans from lenders. FNMA and FHLMC together make up what is know as the Secondary Market. Although it does not originate any loans, by purchasing home loans originated by lenders, it frees up more money to be used by those lenders to originate more home loans. These loans must conform to FNMA standards which is why they are called Conforming Loans. FNMA programs can often be combined with other programs to create very effective financing packages.
Typically funded by Government Agencies from the federal level town to the county or city level. These programs offer interest free loans to selected home buyers which will be forgiven if the borrower stays in the home for a set period of years (usually 6-10 years). This means that if you live in your home for that number of years, you never have to pay back the loan or any interest on the loan, thus it becomes a gift. These gifts can be used for down payments or closing costs.
Interest Only Loans
Lender programs designed to lower the monthly payments of your home loan. A typical home loan payment will include the principle which pays down the loan, and the interest which pays the lender for the use of the money. This program will let you make a lower payment by paying only the interest and not the principle for a period of years (usually 5 years). At the end of this time, your payment will increase to completely pay off the loan over the remaining term. This can lower your payments over the first several years by as much as 20% or $200 for every $1,000 of payment. A $2,000 payment can be lowered to $1,600 saving you $400 every month for several years. This can also get you into a much nicer home by using the $400 savings to purchase about a $66,000 more expensive home. These numbers change with the amount of loan and the interest rate of the loan. The higher the interest rate, the lower the savings will be.
Working with Mortgage Brokers can give a lot of flexibility in your home loan pricing. They may be able to go get a much larger commission from a Wholesale Lender by sending them a slightly higher interest rate loan. Most companies will never tell the borrower of the increased commissions earned. On the other hand many lenders will pass the savings onto the borrower. For example, on a $200,000 loan increasing the interest rate from 6.000% to 6.125% will only increase the monthly payments by $16.12, yet it can increase our commissions by over $1,000. If you are short of cash and still want to buy a home, this program can help as we can use this $1,000 to pay for your closing costs.
The Mortgage Credit Certificate (MCC) Program is sponsored jointly by the Federal Government and a local government (City or County). The MCC is a tax savings plan recognized by the IRS and offers a tax credit of up to 20% of the interest you pay in your home loan. This credit can give you several hundreds of dollars each month which will come to you in your paycheck. We can use the credit to greatly increase your qualifications which will get you into a much nicer home. The MCC can be combined with many other programs to create very effective financing packages.
Typically funded by Government Agencies from the federal level down to the county or city level. These are typically 2nd Trust Deed loans used for your down payment and/or closing costs. The loans are silent in that they do not require any monthly payments. Rather than paying any interest on the loan, you will share any increase in equity you earn over time with the issuing agency. Upon selling your home, you will have to pay back the silent loan and a portion of the increased equity, if any. With most of these programs, the longer you stay in the home, the less equity will need to share and after many years (usually 15 years) you may not have to share any equity at all, simply pay back the original loan.
Typically funded by Government Agencies from the federal level town to the county or city level. These loans are typically 2nd Trust Deeds used for your down payment and/or closing costs. The loans are silent in that they do not require any monthly payments. Interest will accrue on the loan for as long as you keep the property. Upon selling your home, you will have to pay back the silent loan and any interest that has accumulated. The interest is usually very low and sometimes will be forgiven if you do not profit enough from the sale of your home.
A home loan for Veterans and offered by the U.S. Department of Veterans Affairs (VA). This program is a self insuring program designed to help Veterans and Active Duty Personnel purchase a home. The program offers no down payments and easier qualifying than most conventional or other conforming loans. The loan is insured by the government, however you must apply and get the loan from a VA approved lender or broker
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