Most people who rent can actually afford to buy their own homes.  So what’s stopping them?

Many tenants believe that owning a home requires a big down-payment, which is difficult to save while still paying all their regular monthly bills.  Others are convinced they wouldn’t qualify for a mortgage, and that the payment would be too much anyway.  In addition, just about everyone is overwhelmed by the legal and financial red tape surrounding the purchase of a home.  It seems a whole lot easier to just keep paying rent! 

Here are a few facts this report will teach you that could change your mind:

FACT: Most people actually qualify for a 3% down mortgage but don’t realize it.  Some people can actually qualify for a zero down payment mortgage!

FACT: There are special government programs that help first-time homebuyers come up with a down-payment.

FACT: The average mortgage payment costs about the same as the average rent payment.  For example, if you are paying $650 per month in rent, you could be     making mortgage payments on your own $77,5000 home.  That would probably  buy you a lot more space (and privacy!), than you have right now.

FACT: 77% of renters surveyed said the biggest reason they won’t even check into the possibility of owning their own home is because they are afraid they will feel obligated to buy, or are going to be hounded by salespeople.

Glossary of  Critical Terms

Closing Costs:  These are costs which are not controlled by the lender, and are required for anyone purchasing a home regardless of loan amount or lender.  These include expenses such as attorney fees, title insurance, survey, recording fees, appraisal, and termite inspection.  All of these services are provided by independent professionals who are not affiliated with your lender.  You can usually figure on your closing costs being approximately one to one and a half percent of your loan amount.

Conventional Loan:  Loan that may or may not require Private Mortgage Insurance.  (Any loan amount with 20% or more down payment will not require PMI. Any loan amount with zero or 3%-19% down payment will require PMI.) This type of loan is subject to the qualifying guidelines set forth by FNMA (Fannie Mae) or FHLMC (Freddy Mac).

Credit History:  This is a “snap-shot” of your past and present debt, current available credit, and a rating of your debt repayment history.  This is very important to a lender so that they can know if you are a good credit risk.

Down Payment:  The difference between the loan amount and the sales price of the home you are purchasing.  This is measured in a percentage; for example, a 3% down payment on a $70,000 home would be $2,100.

FHA Loan:  A loan that is insured by the Federal Housing Authority.  This type of loan is geared toward providing moderate to low income families mortgages, and is subject to the qualifying guidelines set forth by the Federal Housing Authority.

Interest Rate:  The percentage of interest charged on the amount of money borrowed.  This rate will vary slightly from lender to lender, and will vary according to the type of mortgage chosen (30 year fixed, 3 year adjustable, etc.).  Now is an excellent itme for mortgage interest rates, as 1998 has ushered in constantly dropping rates that are the lowest in over 30 years!

Mortgage Broker:  A mortgage is different from a single lender/ bank, in that they represent many different lenders in much the same way a travel agent represents many different airlines.  Most people don’t call a single airline and expect to get a complete picture of all available flights and prices, and yet some people will call a single lender/bank and end up choosing the wrong type of financing which can literally cost them hundreds of dollars.  A mortgage broker’s knowledge and complete view of all financing options can enable people with low income, self-employment, commissioned income, or even credit problems to obtain excellent financing.  A mortgage broker’s compensation as your consultant (much the same as a travel agent) is a finders fee paid by the lender.  These lenders always offer better rates and superior  prepayment privileges and often shave as much as half a percentage point off the normal market rate.

Pre-Paid Costs:   These are the costs which cover your escrow account for the future payment of  interest, property taxes, and homeowners insurance.  Property taxes are set by the appropriate government taxing authority and, unfortunately, are not negotiable.  Depending on the regulatory agency, (FA, Fannie Mae, etc.) You will be required to pre-pay anywhere between 2 to 11 months of property taxes at closing.  You can usually figure on your pre-paid costs being approximately one to one and half percent of you loan amount.

Private Mortgage Insurance:  This insurance is required for most loans that have a down-payment of 20% or less.  Private Mortgage Insurance insures the lender in the event that you default on your mortgage payment and the lender is forced to sell the property at a loss.

VA Loan:  A loan that is insured by the Department of Veteran’s Affairs.  This type of loan is available only to veterans, and is subject to the qualifying guidelines set by the Department of Veteran’s Affairs.

How Can I Qualify For a ZERO Down Payment Mortgage?

FHA Loans: An FHA loan is geared towards first time homebuyers, and the goal of this government program is to get moderate to low income families into homes by providing incredibly reasonable and achievable mortgages.

            This type of loan is officially considered a 3% down mortgage, however, your down-payment, closing costs and pre-paid costs can come as a gift, another secured loan, a retirement fund, an investment, or 401 K, or any number of approved sources apart from your pocketbook!  Therefore, for all practical purposes, this loan would require ZERO down payment, and ZERO closing costs and pre-paid costs!

To qualify for this type of loan, you need to have:

VA Loans:  A VA loan is available only to veterans and is geared toward providing modest housing for individuals with modest to low income.

            This type of loan is truly a ZERO down payment mortgage.  The loan amount is 100% of the sales price of  your new home, plus the VA funding fee.  Therefore, the loan amount is actually slightly higher than the price of the home!  Your closing costs and pre-paid costs can come from a gift, another secured loan, a retirement fund, an investment, or 401 K, or any number of approved sources.  In most cases, the seller will pay your closing costs and pre-paids.  Now, why on earth would they do that?  When the price of the home can be manipulated, it actually doesn’t cost the seller anything.  For example, if you are looking at a home that is listed at $65,000 but is appraised to be worth $68,000, then you can purchase the home for $68,000 and the seller will pay your closing costs and pre-paids with the difference!  It may sound strange, but this happens VERY frequently!

To qualify for this type of loan, you need to have:

How Can I Qualify For a 3% Down Payment Mortgage?

FHA Loans: As stated previously, an FHA loan is officially considered a 3% down mortgage. If you have saved enough to cover your 3% down payment and closing costs, and pre-paids, then you are way ahead of the game.  Otherwise, keep in mind that your down-payment, closing costs, and pre-paid costs can come from a gift, another secured loan, a retirement fund, an investment, or 401 K, or any number of approved sources.

To qualify for this type of loan, you need to have:

Conventional Loans:  Conventional loans are geared towards people with good credit and some savings to cover down payment.  There is a highly specific type of loan for first time homebuyers called the Community Home Buyers program.

            This Community Home buyers loan does require a 3% down payment of your own funds (not from a gift or a loan).  As is a VA loan, the sales price can be manipulated so that the seller can (and often does!) pay your closing costs.  However, you will be required to cover your pre-paid costs with your own money.  Because it is intended for first time homebuyers, there is a maximum income limit.

To qualify for this type of loan, you need to have:

How Do I Figure How Much Home I Can Qualify For?

            Your mortgage broker can help you measure your financial capability to have a loan.  The way it is figured is by dividing your gross income by your total outstanding debts (including the new payment on the home you are trying to buy). Generally, you are allowed 40% of you monthly income to be used for your housing expenses and all other current obligations you have outstanding (including credit cards, auto loans, student loans, etc.).

            An even easier and more accurate way to figure how much home you can qualify for is to get pre-approved for a loan, even before you begin looking for a home!  Yes, you can get approved for a home loan, even before you find a home.  We can refer you to a By Referral Only  mortgage consultant and schedule a free, no-obligation appointment.

This allows you to shop for your dream home in total confidence, because you’ll know you’ve been pre-approved for the loan.

If you would like to know more about this pre-approval process, please call 1-800-689-1126 for your FREE copy of the report “HOW TO GET PRE-APPROVED FOR A LOAN, BEFORE YOU BUY!”  Don’t talk to any salespeople; simple leave your name and address on your voice mail, and you will receive this critical report in several days.

What Are Some of  the Bonuses of Owning My Own Home?

More space (Attic, Basement, Garage, Closets,  More Rooms)