Tag: zero down mortgage

Buy A House with a Small Down Payment

If you are a first-time homebuyer, getting a mortgage may seem overwhelming — especially with all the different options available. Maybe you don’t have a lot of money for a down payment or your credit isn’t great. The good news is, you can still qualify for a home loan. Here are 4 low or no down payment options that can help you, as a first-time homebuyer, get into the house of your dreams.

FHA Loan

With an FHA loan, all you need is a 3.5% minimum down payment to buy your first home. Because the Federal Housing Administration backs the FHA loan, the qualifications are a bit more lenient. People who have no established credit or small savings for a down payment, and even a credit score as low as 580 can qualify. The FHA loan is also available to immigrants who have a Visa or Green Card, as well as those who have gaps in their employment.

It’s also easier to qualify for an FHA loan if you’ve filed for bankruptcy. With a conventional loan, you have to wait four years after filing Chapter 7 to apply for a mortgage. With the FHA loan, you only have to wait two years. If you filed for Chapter 13, you only have to wait one year. You can also get an FHA loan three years after being foreclosed on your previous property.

VA Loan

The government created the VA loan to provide home ownership to veterans and military personnel. Like the FHA loan, the government backs the VA loan for extra security, so qualifying is easier. To qualify, you must get a certificate of eligibility from the Veterans Administration. Having bad credit may not hinder you from getting approved. VA loans require no down payment or Private Mortgage Insurance (PMI). Veterans can choose either a 30-year fixed VA loan or a 15-year fixed VA loan for up to $424,100. They may also get a cash-out refinance of up to 100% of their home.

USDA Rural Development Loan

For those wishing to buy a home in a rural area, the USDA Rural Development Loan requires zero down payment, making it great for first-time home buyers. The government also backs this loan for added security, so there’s low or no PMI attached to it. You only have to pay a 1% guarantee fee upfront and 0.5% each year after that. That’s less than the 1.75% up front and 0.85% each year with the FHA loan. If you’ve recently filed for bankruptcy or were foreclosed, you won’t have to wait too long to qualify for a USDA loan.

Conventional 1% Down Mortgage

Important Update! Last date for loan submissions is 5/31/2018. Program is being discontinued.

Riverbank Finance offers homebuyers a way to put only 1% down on a home and still get a conventional mortgage. In this case, the home buyer puts 1% down and the lender (Riverbank Finance) contributes 2%, giving home buyer 3% equity when closing on the home. Freddie Mac created this option to make homes more affordable for new buyers. It allows people to buy a new home for, essentially, the cost of one month’s rent and avoid PMI altogether or drop PMI in the future. Your 1% down payment may be a gift from someone, you must have at least a 700 FICO score, and your debt-to-income (DTI) ratio is limited to 43%.

For more information or to speak with a loan officer about any of these mortgage options, call Riverbank Finance at (800) 555-2098.

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7 Mortgage Myths Debunked

7 Mortgage Myths Debunked

It is no secret that the home buying process is a long and complicated one. Getting started can be intimidating and confusing, so we’ve compiled a list of common mortgage myths we hear from our clients. Here, we’ll break them down and explain the truth about mortgages, in plain English.

1. Having my credit pulled will drop my credit score

Many prospective buyers are hesitant about having their credit pulled because they fear it will destroy their score, but it has far less affect than you’d think. Having your credit pulled for any reason may have an impact on your overall score, but it is usually very minor.

Did you know, you actually have many different types of credit scores? Depending on who accesses your credit report, from which bureau, and for what purpose, a different scoring model is reported. Mortgage inquiries are treated differently than other credit inquiries because you can shop around for the best rate and terms. The credit bureaus do not penalize consumers for rate shopping, so any mortgage inquiries that happen within the same 45 days are treated as only 1 inquiry on your credit report.

2. Credit Karma says my score is…

Popular sites like Credit Karma and Free Credit Report are great tools for monitoring trends in your credit report, but are simply not reliable sources for determining credit eligibility. We’ve compared Credit Karma’s “scores” to actual scores we’ve pulled, and seen as much as a 100-point swing in either direction—whoa!

Don’t necessarily trust information you obtain from these websites—talk to a mortgage loan officer! In addition to providing you with an accurate credit rating, your loan officer can provide insight into what factors may be affecting your score, and what you can do to improve it.

3. I haven’t been at my job for 2 years yet

If you haven’t been in your current job or position for the last two years, don’t worry! As long as you have had continuous employment for the last two years, you’ll still qualify. Any gaps in employment will have to be detailed with a signed letter of explanation, but do not necessarily doom your chances of being pre-approved.

4. I need to payoff and close out my credit cards first

For some unknown reason, many of our clients believe they should have all other debts paid off before buying a home. While this is a noble idea and paying off debt is rarely—if ever—a bad idea, closing revolving accounts will actually do more harm than good! Pay off—or pay down—as many accounts as you can, but do not close out your credit cards. Having unutilized credit positively affects your credit score and your borrowing profile!

5. I don’t have the funds for a down payment

It is a common misconception that borrowers must have 20% to put down on any home that they want to purchase—not to mention closing costs—but that simply isn’t true anymore. There are many mortgage programs available today that did not exist a decade ago. For example, the FHA now offers mortgages with as little as 3.5% down, and both USDA and VA offer programs with no down payment at all!

6. Owning is more expensive than renting

It is almost always cheaper to pay a mortgage than rent a comparable home in the same area. Owning a home also allows you to build equity. When your lease ends on your apartment, you are welcome to leave, but the rent you paid is long gone. Buying a place of your own allows you to build your own wealth over time, not your landlord’s.

7. My bank will give me the best deal

Many borrowers, when thinking of purchasing a home, start with their trusted bank or credit union first. It makes sense, right? They know you, you’ve banked with them for years, they already have all of your personal information, it should be easy peasy, right? Wrong! Loan guidelines are the same for everyone, no matter which bank or lender originates the loan. Your bank won’t be able to cut you any special breaks or give you an extra low rate, just because you’ve been a member for a while—even if they want to!

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To apply for a Mortgage or Refinance call Riverbank Finance today at 1-800-555-2098.

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USDA Lowers Upfront and Annual Fees for RD Loans

USDA Lowers Fees for RD Loans

Great news for homebuyers considering a USDA rural development home loan (RD Loan)!  The already popular zero down mortgage is getting even better. The USDA announced this week that they will be decreasing both the upfront guarantee fee—a closing cost which is financed into the total loan amount at close; and the annual fee—the USDA version of PMI, which is paid monthly.  Effective October 1st, the first day of fiscal year 2017, the upfront guarantee fee will decrease from 2.75% to 1%, and the annual fee will decrease from .5% to .35%.

Now, unless you spend your spare time studying loan program guidelines, that might sound like gibberish—so let’s do some math to show the savings.  On a $200,000 home purchase, the upfront guarantee fee would decrease from $5,500 to $2,000 and the annual fee would decrease from $83 to $58.  That is a savings of $3,500 on the total loan amount and $25 per month over the life of the loan!

Requirements for a USDA Rural Development Loan

You might be thinking, that’s great, but how do I know if a USDA rural development loan is the right fit for me?  I’m glad you asked!  Qualifying for a USDA RD loan is very similar to an FHA mortgage, but requires no down payment and has two important requirements for income limits and location.

Traditionally, when purchasing a home with less than 20% down, most loan programs require private mortgage insurance (PMI) to be added to your monthly payment.  For this reason, USDA loans are more favorable, because their annual fee of .35% is significantly smaller than the .85% required for FHA loans.

Have a specific scenario you’d like to run past us?  Give us a call to speak with one of our licensed loan officers, or check out our USDA Mortgage Calculator.  We would love to recommend the best loan program for you and your situation.

Apply for a Rural Develoment Mortgage

Buying a home with no down payment has never been better. Call Riverbank Finance today at 1-800-555-2098.

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VA Home Loans for Military Veterans | Free Appraisal

Veterans Day - Free Appraisal OfferAbout Veterans Day

As the United States continues fighting overseas, the population of military veterans continues to increase. According to the most recent Census information there are over 21 million veterans that have served our country. The growing population of veterans struggle to receive proper healthcare and are faced with repeated VA hospital related scandals and deficiencies. There are nearly 4 million veterans with service related disabilities that return to the United States and are in great need of a helping hand from those around them.

Please remember the meaning of Veterans Day and together, let’s honor those who have served our country.

VA Home Loan | Free Appraisal Offer

Here at Riverbank Finance, we take pride in offering zero down VA loans to our military veterans. As with most of our loan options, we offer VA loans with no lender fees and have zero cost loan options. From today through the end of November, the owners of Riverbank Finance will personally pay for the appraisal cost for new VA-eligible home buyers that receive financing through our company.

Disabled Veterans can Waive the VA Funding Fee

For military veterans with a disability rating of at least 10%, the Veterans Administration will waive the VA funding fee.  Additionally surviving spouses of veterans who died in service or from a service-connected disability are also eligible to have the VA funding fee waived.

Michigan Property Tax Exemption

Veterans that have served our country and have disability rating of 100% are eligible to have their Michigan property taxes waived for their primary residence located in the state of Michigan. We would love to help our disabled veterans complete the required paperwork to have their property taxes waived as part of our home buying process.

We look forward to helping you buy a home with no down payment using your VA benefits. Call a VA loan officer today at 1-800-555-2098 to start your home purchase application or request information below:

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Disclaimer: Appraisal program available only to new clients that are approved for VA financing. Riverbank Finance LLC reserves the right to discontinue this program without notice. Not all will qualify. No purchase necessary. Call 1-800-555-2098 to request your VA certificate of eligibility through the Veterans Administration. 

Tips for Cheap Closing Costs for Buying a Home

Red and white tips for cheap closing costs image.Being a homeowner can be an expensive investment which is why it is so important to get cheap closing costs when buying a home.  With the current prices of homes in Michigan at the lowest points in years, many people are taking advantage of the economic downturn and becoming home owners. The price of the home is not the only factor you should be concerned of when buying a house.  Getting affordable closing costs can save you thousands of dollars when closing on your purchase.

The first thing to know is what costs are involved as a buyer to purchase a home. Many people may be aware of down payment requirements for most programs however other costs can add up quickly.  These costs include lender fees, inspection fees, title fees and prepaid items.

What are down payment requirements?

When purchasing a home there are many options to consider for mortgage types, each of which have different down payment requirements.  A licensed loan officer will be a great resource to help pre-approve you and recommend the best mortgage for your credit, income and savings.

A conventional mortgage is the most popular product however it may require anywhere from a 3% to 20% down payment depending on what bank you work with an your financial situation.  Another popular mortgage option is a FHA mortgage which is more forgiving based on credit issues and requires only a 3.5% down payment.  Another great mortgage product these days is a USDA Rural housing loan which is a zero down mortgage (more information on buying a home with no down payment).  There are pros and cons of each product so be sure to do your research to make sure you know what is best for your situation.

What are Lender fees?

Depending on what lender you work with, you may have a substantial amount of fees from your Mortgage Company or bank when buying a home.  It is no mystery that banks will make money off your mortgage however it is important to know how much you are being charged.  Lender fees may include, underwriting fees, origination fees, discount points and even other miscellaneous fees.

Be sure to ask your loan officer what your lender fees are and ask if there are any ways to have these reduced.  For example, your loan officer may have programs to offer you zero cost mortgages which will save you money out of pocket.

Many borrowers are focused only on the interest rates that they are offered and simply go with the lowest rate option given to them.  This could be a huge mistake.  Working with a good mortgage broker or mortgage company, you may be able to get thousands of dollars credited back to cover your third party closing costs and get a free mortgage.  While other options may have a slightly lower rate, it would take you decades to recover the cost saving you could have up front when buying a home.

What are Inspection fees?

Inspection fees include optional home inspections such as pest inspections, water tests, and general home inspections and lastly the required appraisal inspection.  Buying a home might be the largest investment of your life so it is important you know exactly what you are buying.  It is recommended that you pay for optional inspections to make sure there are no electrical issues, plumbing issues, or structural issues that may result in thousands of dollars of costly repairs.   Other issues such as rodent infestations and termites may be issues that will get worse over time and lead to more expensive repairs if not treated properly.

What are title company fees?

The title company is a third party company that will handle the escrow transaction and provide an insurance policy that there are no other liens attached to the home when you purchase it.  The cost from Title Company to title company can vary greatly so it is important to remember that this is a shoppable service that you can select.

Title company fees may include a closing fee, escrow fee, title insurance, recording fees, notary fees, courier fees and others.  These fees can add up to thousands of dollars and are often overlooked by buyers as they complete their purchase.  It is recommended that you ask your loan officer for recommendations for title companies so you can be sure you are getting a fair deal.  Remember that you DO NOT need to use the seller’s title company.

What are prepaid items?

Prepaid items are costs that are required to be paid in advance when closing on your home purchase. Prepaid items include taxes, insurances and escrow fees.  Although these are not technically fees they are costs that are required to be paid at closing which may add up to thousands of dollars.

If you do not have a large down payment (typically 20%) you will be required to have an escrow account set up with your mortgage.  An escrow account is an account that your mortgage company holds for you to pay out your taxes and insurances when they become due.

When closing on your home purchase you will be required to pay any taxes and insurances that are currently due or that may become due within the next 90 days.  Your escrow account will need to be established so that when your next bill is due, your account will have enough money to pay the bill.

A couple of tips to keep your prepaid items at their lowest is to make sure you use your homestead exemption if you are buying a house as your primary residence.  This is a tax break that will save you around 30% off your property taxes.  Another tip is to call around and get more than one home owners insurance quote. Be sure to compare the save coverage amounts and don’t just pick the cheapest one unless it offers the same coverage. These tips for saving on prepaid items can add up to thousands of dollars in savings at the closing.

Now that you know what costs are involved when buying a home, we can discuss how to get these costs paid for you by someone else!  There are a few ways that might cover your closing costs including seller concessions, lender credits or a gift from a family member.

What are seller concessions (seller paid closing costs)?

As a buyer, you may be able to get your closing costs paid for you by the seller simply by putting this in your purchase offer.  If you are short on cash but are otherwise ready to purchase a home, then this may be a great tip to reduce or even completely wipe out your closing costs at the closing of your home.

It is common for buyers to ask for up to 3-6% of the purchase price to be paid for by the seller.  Be sure to speak with your loan officer and make sure your lender will allow you to receive seller paid closing costs.  You also do not want to ask for too many costs to be paid for on your behalf if you cannot use the full credits. For example, if you ask the seller to pay $5000 of your costs but your costs are only $3000 then you may be throwing money out the window.  It may be better to ask for $3000 in costs and reduce your offer price by $2000.

What are lender credits and how does it help me?

A lender credit is money credited back to you from your mortgage company that can pay for third party costs and fees.  Working with a good mortgage broker or mortgage company, you may be able to get money credited to cover your closing costs.  Typically you can get a slightly higher interest rate and get large credits toward your costs which will reduce the amount of money you need at the closing.  As discussed above, a $5 more payment may get you thousands of dollars which is an easy decision if you are not going to stay in your home for more than 5-10 years.

What is gift and how does it work?

While this may not be the best solution, if all else fails there is always asking mom and dad for a gift for your down payment and closing costs.  Many mortgage programs allow buyers to get a gift from a family member or close friend to cover the closing costs, down payment and prepaid items that are often necessary when buying a home.

There is a very specific process that needs to be follow when getting a gift so be sure to speak with your loan officer and get advice on how a gift needs to be handled.  Be sure to tell mom and dad thanks for the extra help.  One tip when asking for a gift is to point out that they may be living with you someday!

Following these tips on getting cheap closing costs can save you thousands of dollars on your home purchase.  The extra money saved may be the trick to allowing you to buy the home of your dreams years sooner.  For additional information on how to save on closing costs contact a Riverbank Finance loan officer by calling 1-800-555-2098 or submit a request below.

For more information read: Tips for First Time Home Buyers

Do I qualify for no closing costs?

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