Freddie Mac, a provider of mortgage funding for the nation’s housing market, has recently introduced a loan program for first time home buyers and low-income home buyers enabling them to receive mortgage loans with downpayments of only 3%. This could be a great opportunity for those who have good credit and decent income, but with little in the savings account, such as millennials.
Here is some information from Freddie Mac on Home Possible Advantage:
- There are minimum credit requirements : credit score of 660 minimum
- You can’t earn more than 100% of your area’s median income
- You need to have the funds to pay closing costs and make the downpayment
- First time home buyers need to complete a home buyer education program
This 3% down program could be wonderful to help people get into homeownership by removing the daunting 20% down that many people make, thus avoiding Private Mortgage Insurance (PMI). Borrowers of varying loan types can put down less than 20% but are typically then required to have PMI until they reach 20% equity in the home. PMI payments vary but an estimate would be $40-$80 per month 100,000 borrowed. Once 20% or more equity is gained, the PMI insurance can be cancelled and you continue on with your normal mortgage payments.
For detailed information talked to a mortgage lender in your area of Wisconsin. You can start searching for homes for sale in Wisconsin at firstweber.com. Remember it is very smart to get preapproved for a mortgage so you are ready to move fast when you “meet” the right house.
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Would a low downpayment program help someone you know? Please share.
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