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Tuesday, January 20, 2015

Can you buy a home with only 3% down?

Are you (or your spouse) a first time home buyer? Are you put off by all the mortgage insurance and conditions that apply to FHA loans?
Are you looking to refinance into a fixed rate 15 or 30 year mortgage but have little equity?
You are in luck!

In December, Fannie Mae announced they will offer 97% LTV (loan to value) conventional financing to help home buyers who would otherwise qualify for a mortgage but may not have the resources for a larger down payment.

In many cases, the Conventional 97 program is less expensive than an FHA mortgage. This is because the Conventional 97 program does not require an upfront mortgage insurance premium, and because its annual mortgage insurance rates are cheaper, too. Mortgage rates are often comparable.

Conventional financing does not handcuff borrowers to mortgage insurance forever like FHA MIP does. Once equity targets (20% – 22%) are reached, current appraisal supported value can eliminate conventional PMI (Private Mortgage Insurance). Not so with that FHA MIP, once you get it, the only way to get rid of it is to refinance out of the FHA loan or sell the house!

The Conventional 97 program requires a minimum credit score, which varies by downpayment source. All mortgage applicants must show a credit score of 680 or better. However, mortgage applicants accepting gift funds for a downpayment must show a credit score of at least 740. Your credit score is based on the middle of your three credit scores, as reported by the major credit bureaus TransUnion, Equifax and Experian.

I know you want to know more about this and I have lenders that can help you.

Contact me today!

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