Ring in new year with mortgage suggestions

Lenders say they often dispel the mistaken idea that home buyers have to make down payments of at least 20 percent. In fact, some loan programs allow qualified people to buy homes with no down payment at all.

The Department of Veterans Affairs guarantees zero-down VA mortgages for qualified borrowers: veterans, active-duty service members and certain members of the National Guard and Reserves.

The U.S. Department of Agriculture guarantees zero-down mortgages as part of its Rural Development program. The loan guarantees are available in eligible areas — mostly rural areas, though some are suburban.

Navy Federal Credit Union offers zero-down mortgages for qualified members to buy primary residences.

Finally, Federal Housing Administration-insured mortgages allow down payments as small as 3.5 percent. And a few lenders offer conventional mortgages with down payments of as little as 3 percent with private mortgage insurance. Get a loan with imperfect credit

FHA-insured loans are appealing because they’re widely available to borrowers with imperfect credit.

You need a credit score of 580 or higher to get an FHA-insured mortgage with a down payment as low as 3.5 percent.

If your credit score is between 500 and 579, you need to make a down payment of at least 10 percent to get an FHA mortgage. Keep savings in reserve

Mortgage lenders don’t want you to deplete your savings on the down payment and closing costs. They want you to have “reserves” — cash, or assets that can be sold quickly, so you can take care of unexpected expenses without missing house payments.

Your lender will calculate the minimum reserves you’ll need to qualify for a mortgage. Refinance to 15-year loan

There are various refi triggers, even after interest rates have risen above record lows.

Refinancing into a 15year mortgage saves money in two ways: 15-year mortgages tend to have lower interest rates than 30-year loans, and you pay interest over a shorter period. In most cases, the monthly payments on a new 15-year mortgage are higher than for a 30-year loan, but the total interest paid over the life of the loan is less. Borrow what you can afford to repay

Live within your means. You can move up to a more expensive house after (and not before) your income rises. A conservative rule of thumb is that all of your monthly debt obligations shouldn’t exceed 36 percent of your income before taxes.

If you have a high credit score and will have plenty of money in the bank after you close on the loan, the lender will be willing to let you accept a larger house payment. No closing costs

A typical mortgage has thousands of dollars in mortgage fees and other closing costs. If you pay those fees out of pocket, you tend to get the lowest interest rate you’re eligible for. But you might want to accept a higher interest rate in exchange for the lender paying some or all of the closing costs.

Generally speaking, no-closing-cost mortgages are attractive to people who plan to sell their homes within five years or so. If you plan to stay longer than five or six years, your total costs will be lower if you go ahead and pay the closing costs out of pocket. Get a zero-down VA loan

A 2010 survey found that many home-buying veterans weren’t aware of the VA loan benefit or didn’t know much about it.

In fact, VA loans are available to honorably discharged veterans, those who are on active duty or who have completed at least six years of service in the National Guard or selected Reserve units. Certain sur- viving spouses of veterans are eligible, too.

The primary feature of VA loans is that they can be used to buy a primary home without a down payment. A cash-out refi might work for you

A cash-out refinance happens when the homeowner refinances the mortgage for more than the amount owed. The borrower pockets the difference.

Cash-out refinances were popular during the real estate boom of the early 2000s. Then they almost disappeared after the housing bust wiped out billions of dollars in home equity. Now that home values have climbed near their pre-recession peaks in many markets, cash-out refinances have returned.

The other way to extract cash from equity is through a home equity loan or line of credit. When you want to spend the money on something short term, it’s probably better to get the money through a home equity loan or line of credit. But if the purpose of the money is long term, then a cash-out refi might make more sense. Refinance into a VA loan

If you’re eligible for a VAguaranteed mortgage, you might be able to refinance from a conventional mortgage (or an FHA-insured mortgage) into a VA loan.

In many cases, you can refinance for up to 100 percent of the home’s current value. This means you can do a cash-out refinance using a VA loan. Funding fees for cash-out VA refinances vary from 2.15 percent to 3.3 percent, and the fee can be added to the loan balance. Be patient

Don’t charge up your credit cards and don’t apply for new credit while the mortgage is going through the underwriting process.

When you apply for the mortgage, the lender looks at your credit report and your credit score. Then, shortly before closing, the lender surveys your credit again. If there’s a substantial change, the lender might have to delay your mortgage closing.