Borrower secures loan with 1 percent down, avoids mortgage insurance
Loan officer: Alex Greer. Property type: Condo in San Jose. Appraisal value: $440,000. Loan type: Conventional 30-year fixed. Loan amount: $424,100. Rate: 4.5 percent. Backstory: With Bay Area rents at record highs, the average resident is using a large percentage of their monthly income on rent, which leaves little for savings and almost nothing for a home purchase. This makes it nearly impossible to save enough money for a 20 percent down payment in the Bay Area.
Fortunately, Fannie Mae and Freddie Mac have been improving their first-time home buyer programs, HomeReady and HomePossible. Both programs go all the way up to 97 percent loan-to-value and only require a simple home ownership class for a first-time home buyer to become eligible.
In addition, the borrower has the choice not to have mortgage insurance. At the Mortgage Outlet, we have a program that goes a step further with a lender credit of 2 percent toward the down payment, resulting in the borrower only needing a 1 percent down payment to purchase a home.
With this information, the borrower was in shock and extremely excited that they could stop paying someone else’s mortgage and start paying their own.
The borrower forged ahead and was able to find a condo in San Jose. The purchase loan was submitted and 12 days later, the loan was clear to close and the borrower was well on their way to becoming a first-time homeowner.
Alex Greer, the Mortgage Outlet, (408) 352-5147,
agreer@themortgageoutlet.com.