You’d be wrong…. sort of…..
As of March 31st, 2008, you can no longer get 100% financing.. BUT, if you were preapproved for it prior to March 31st, then you prolly have 60-90 days to still get that done(read your pre-approval letter to see how long you have)…
Want to get rid of PMI, and do 100% financing. Well that ends April 30th. Yes, I am talking about those 80/20 loans(80% first mtg, and 20% second mtg). You have to have 20% equity in a home in order to not have to pay PMI(Preventative Mortgage Insurance), and the 80/20 loan makes it look as if you have 20% equity. So if you want to take advantage of this type of scenario, then you need to get your loan approval before April 30th….
It’s my understanding, that the new minimum is 3% down, but you can circumvent that by having the seller pay for it. What you say?!?! Raise the asking price up by 3% on that home, and then have the seller give 3% towards your down payment/closing costs.. Also, you better hope the home appraises for more than the new price..
Speaking of appraisals. Banks are now self-auditing over a third of the appraisals that come through. They are supposedly getting tougher on bad appraisals. The mortgage broker I spoke with stated that he has only had 2 appraisal problems in the recent past, and one of those the appraiser didn’t agree to value, and the other the bank didnt agree with the appraiser. Bank wins on the second scenario, so that loan didn’t go through.
Lots of ways to buy a home. Just try not to get in over your head. ARM’s(Adjustable Rate Mortgages) can be a great way to get your foot in the door, but either expect to sell before the rates increase, or you better refinance before the rates increase.
Couple of things to look at when getting a mortgage: Pay attention to how long before rates can adjust when you have an ARM loan. Also, be aware and look for pre-payment penalties if you sell before the 15-30 year term is up. If you get a fixed rate mortgage, see if it is assumable. You get a great rate, then you might be able to use that when it comes time to sell. Hopefully you have some equity, so they give you some cash at closing, and you can let them take over your mortgage so they can take advantage of your great rate!
As I stated earlier. If you have a 150k loan, and the rate goes up by 1%, that adds $100.00 to your monthly payment. Most of these ARM loans are setup to where they can increase by up to 2% in a year… BE CAREFUL FOLKS!!!!!
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