How can you boost your Home Buying power?
If you’ve gone through the mortgage pre-qualifying process and are not satisfied with the amount the mortgage lender will allow you to borrow, you may need to look into buying a home of lesser value.
You could also wait until your income increases, which in turn would raise the amount you could borrow from a mortgage lender when buying a home.
Another option would be to pay-off some of your current debts.
Mortgage Insurance
Mortgage insurance provides protection to the mortgage lender in case the buyer fails to repay a loan. Insured loans by the government (such as FHA loans and VA loans) or by a private mortgage insurer allow the homebuyer to buy a home with a lower down payment.
Private Mortgage Insurance (PMI)
With private mortgage insurance, mortgage lenders will lessen the down payment requirement from 20 percent to as low as 3 percent of the purchase price. The cost of PMI will be included in your monthly mortgage payments and your closing costs.
Government-insured loans
Mortgage loans are also accessible through these federal government programs:
The Federal Housing Administration (FHA) mortgage insurance program operated by the U.S. Department of Housing and Urban Development (HUD).
The Department of Veteran’s Affairs (VA) loan guarantee program.
FHA Loans
With FHA mortgage insurance, you can buy a home with a very low down payment (from 3-5% of the FHA appraisal value or the purchase price, whichever is lower). FHA loans have a maximum loan limit that differs and is determined by the average cost of housing in a given region. For more information on FHA loans go to
www.fha-home-loans.comVA Loans
The VA guarantee permits eligible veterans to purchase a house costing up to $240,000 with no down payment. Also available is a VA jumbo loan up to $300,000, which requires a small down payment. The VA qualification guidelines for VA loans are lenient compared to FHA loans or conventional loans. If you are a qualified veteran, this can be an appealing mortgage loan program. For more information on VA loans go to
www.va-home-loans.comState and local first time home buyer programs
Several states sponsor first time home buyer programs to aid first time home buyers become eligible for a mortgage loan. Local housing agencies also offer attractive loan terms to qualified home buyers in particular areas. These loan terms often consist of low down payments or low interest rates to first-time homebuyers.
Below is a useful site that features a nationwide list of first time home buyer grants:
First time home buyer grants
Alternative financing mortgages
Most lenders offer a broad variety of mortgage types with some mainly aimed toward assisting first-time home buyers be eligible for a larger loan.
Adjustable-rate mortgage (ARM)
The homeowner’s monthly principal and interest payments do not change with a fixed rate mortgage due to the fact that the interest rate is fixed for the life of the loan.
An adjustable rate mortgage (ARM) differs from a fixed rate mortgage because the interest paid is adjusted to reflect the changing market rates. This is reflected by raising your monthly mortgage payments when interest increase and lowering it when interest rates decrease.
ARMs can offer a lower interest rate than fixed-rate mortgages, which can make it appealing to some borrowers. Because of this, the first time homebuyer can qualify for a larger loan since the monthly payments on an ARM start out lower than for a fixed-rate mortgage.
If you feel confidant that your income will increase in the next few years, an adjustable rate mortgage may be right for you.
The Two-Step Mortgages
The two step mortgage is a type of ARM where the interest rate is adjusted once at the end of either five, seven or ten years after settlement. The new rate will stay effective for the remaining years of the mortgage.
Before the interest rate adjustment, this loan protects homebuyers from rising interest rates during the early years of homeownership.
This type of mortgage may attract those homeowners who expect to move within five or seven years of buying a home.
Fannie 97SM. The Fannie 97 is low-down-payment mortgage program. Borrowers need only a 3 percent down payment, while closing costs may be paid by gifts from family or by grants or loans from nonprofit organizations or government agencies. Two choices are available—a 30-year-fixed-rate mortgage with debt-to-income ratios of 28/36, and a 25-year-fixed-rate mortgage with ratios of 33/36.
What is most important is to get pre qualified for a mortgage before buying a home. The mortgage lender should provide you with all available mortgage loan programs that you are qualified for.
Below are some links to get a free mortgage pre qualification for the following types of mortgage loans:
FHA Loans
VA Loans
CalPERS Loans
Bad Credit Loans
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