A Smaller Down Payment, and No Mortgage Insurance Required – The New York Times, 0

A Smaller Down Payment, and No Mortgage Insurance Required

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It was a year of firsts: In 2015, Kristian and Michele Klein welcomed their first child, a daughter, and bought their first home — a freshly renovated four-bedroom Cape Cod in Glen Head, N.Y.

But instead of making a traditional down payment of 20 percent — the magic amount often needed to avoid the added cost of mortgage insurance — they put down just 10 percent, still a significant sum, on their $685,000 house. Yet they managed to circumvent the insurance, saving more than $250 a month.

How did they do it? They took out one loan equal to 80 percent of the purchase price, and another loan for 10 percent — something that has traditionally been called a piggyback loan or a second mortgage.

With home prices on the rise in many parts of the country, coming up with 20 percent can seem an insurmountable task for prospective homeowners of all income levels. Last year, about 65 percent of all home buyers — or 1.9 million borrowers — put down less than 20 percent, according to an analysis by Inside Mortgage Finance that covered about 80 percent of all mortgages and excluded jumbo loans.

While most lenders require mortgage insurance on loans with smaller down payments to compensate for their extra risk, there are several options that do not. A few new programs have become available postrecession, while some older strategies have been resurrected, including the piggyback loan. All let borrowers avoid the added monthly expense of insurance, which generally costs from 0.3 percent to more than 1 percent of the loan amount annually. But borrowers may pay a slightly higher interest rate instead.

Avoiding mortgage insurance won’t always be possible. Nor will it always be the best or most economical decision. But the good news is that prospective home buyers have options, whether through a traditional bank, a credit union or a newer alternative lender.

The Kleins said that having the extra cash on hand, rather than tied up in the house, gave them a stronger sense of security, particularly with a new baby.

A Few Ways Around Mortgage Insurance

Here are several mortgage options for borrowers with smaller down payments, some with and some without mortgage insurance.

0 down mortgage

“We would have some more wiggle room as opposed to giving and using all of your savings for the home,” said Mr. Klein, 34, who works for a consulting firm that represents publicly traded companies. “I would rather have the money in my pocket to work with.”

The 20 percent down payment requirement is etched into the charters of both Fannie Mae and Freddie Mac, which back or purchase most mortgages in the United States up to $417,000 (or $625,500 in higher-cost areas). Home buyers who want to borrow more than 80 percent need to buy insurance to protect the agencies, or another party must provide it for them.

Most commonly, the borrower pays the insurance in the form of a monthly premium, which must be automatically canceled once the mortgage balance reaches 78 percent of the home’s original value (though homeowners can petition to have it dropped once it reaches 80 percent). Mortgages from the Federal Housing Administration, however, continue to charge insurance for the life of the loan.

Alternatively, lenders may pay for the insurance, though that generally raises interest rates for the borrowers — perhaps by 0.375 to 0.5 percentage points, loan officers said, depending on the borrowers’ credit history, their down payment and other factors. The downside is that the rate is higher for the life of the loan, unless the borrower refinances.

A new program from Bank of America, in partnership with Freddie Mac and a group called Self-Help, avoids the insurance altogether, even though it permits down payments as low as 3 percent. But there are some significant limiting factors. Families in the New York area generally cannot earn more than $80,700, the area’s median income; the mortgage amount cannot exceed $417,000; and interest rates are marginally higher than those of traditional mortgages (but often better than other competing options).

At the opposite end of the spectrum is Social Finance, the lender known as SoFi, which got its start in student loans. Eligible home buyers can put down as little as 10 percent on amounts of up to $3 million — without mortgage insurance — though those loans will command a slightly higher interest rate.

Other jumbo mortgage lenders, which generally make loans above Fannie’s and Freddie’s limits of $417,000, are also providing loans with slightly smaller down payments.

“Where we’ve seen the biggest change is in the appetite of jumbo lenders in the private sector to allow for 90 percent financing, which we hadn’t seen be this widespread since before the crash of 2007 to 2008,” said Mark Maimon, a vice president with Sterling National Bank in New York, which acts as a lender that can also work with other loan providers. Jumbo lenders sometimes require insurance, but not always, since they aren’t selling their loans to the government agencies. But they may require a marginally higher interest rate.

0 down mortgage

Then there are the thousands of credit unions across the country that have a little more leeway in offering low-down-payment loans without insurance, largely because they keep their loans on their own books.

“They can listen to the story of the borrower,” said Bill Hampel, chief economist and chief policy officer at the Credit Union National Association. “That doesn’t mean they make riskier loans, but they can balance loan requirements off one another. If they are weak in one category but strong in another,” the credit union can still make the loan, he said.

At CommunityAmerica Credit Union, in Lenexa, Kan., for example, borrowers have several options. They can put as little as 10 percent down using one loan without mortgage insurance, or they can take an initial mortgage for 80 percent of the purchase price and a second loan for up to 15 percent, similar to what the Klein family did. “We are going to run the scenarios,” said Carrie O’Connor, chief lending officer. “You need to look at each individual situation and evaluate it.”

The piggyback or second mortgage — not to be confused with the versions misused during the housing bubble, which permitted up to 100 percent financing — can take different forms. The second loan may be a home equity line of credit, which typically carries a variable rate that is based on the prime rate plus an additional margin set by the lender. It generally requires only interest-only payments, but adjusts to a principal and interest payment after 10 years. (Fixed-rate second mortgages, say over a 20-year term, may be also available, but rates are usually higher than the line of credit.)

Using the line of credit can be a more economical option, even when factoring in principal payments. But the buyers need to be disciplined about paying down the principal. And there’s the risk of rising interest rates, which is a reason some loan officers suggest using this option as shorter-term financing.

“This is a great option for those borrowers that have high bonus or commission income who eventually want to pay off the second mortgage down the road and end up with just one mortgage,” said Deb Klein, a loan consultant at Caliber Home Loans in Chandler, Ariz. Or they may be waiting for their previous home to sell, which will free up cash to pay down the loan.

SoFi factors its costs into one interest rate and uses nontraditional means to vet borrowers, forgoing credit scores and instead looking at something in plain view: extra cash. SoFi requires income documentation for the last two years, and it reviews prospective borrowers’ debt load in relation to their ability to pay the debt under consideration. But SoFi likes to see at least $1,500 left over each month after all debts, including the mortgage, are paid. “We don’t focus so much on ratios as we do dollars of cushion,” said Mike Tannenbaum, who oversees SoFi’s mortgage business. “We underwrite mainly on free cash flow.”

Nicole Armstrong, a corporate employment lawyer, and her husband, who works for a software services firm, recently purchased a three-bedroom white stucco home in the Easton Addition neighborhood of Burlingame, a costly market just outside San Francisco.

Although they have two healthy incomes, a good portion of their assets is locked up in privately held companies, so securing a jumbo loan for the home proved challenging. But SoFi — which Ms. Armstrong said she learned about from a billboard along Highway 101 — ultimately let the family make a down payment of 15 percent and charged a competitive interest rate of 3.75 percent. “It allowed us to put a little less down compared to what the market trend was,” she said. “And we didn’t need mortgage insurance.”

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A version of this article appears in print on March 12, 2016, on Page B1 of the New York edition with the headline: A Low Down Payment, No Insurance Required. Order Reprints | Today’s Paper | Subscribe

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Down Payment – What is a Down Payment, Zillow, zero down mortgage.#Zero #down #mortgage

Down Payment: How Much You Should Save to Buy a House

In this article:

A down payment is the amount of money you spend upfront to purchase a home and is typically combined with a home loan to fulfill the total purchase price of a home. In addition your down payment amount, your credit score, credit history, total debt and annual income will influence how much of a loan you can qualify for.

A great tool to see how much you can afford based upon your down payment and annual income is Zillow s affordability calculator. Zillow s tool will also take into account your monthly debts, the interest rate on your debt, your loan term, and many other settings that you can personalize to give you a more accurate result on a home price.

Down Payments: How much do I need to save?

The higher your down payment, the lower your monthly mortgage payment will be. The amount required for a down payment depends on your loan type. Typically you will need to save 3 to 20 percent of the sale price in cash in order to qualify for a conventional loan (e.g. 30-year fixed mortgage). Down payments for jumbo loans can be as low as 10%. If you put down less than 20 percent on a conventional loan, you will most likely have to pay mortgage insurance (either private or public depending on the type of loan). See more information about mortgage insurance here.

Get pre-qualified and see how much you can afford Zero down mortgage

Low down payment financing options

Saving for 20 percent down might be too difficult or take too many years for many first-time home buyers or borrowers with lower household incomes. Popular alternative programs allow for a zero to 3.5 percent down payment option, although a zero down-payment option is more difficult to get.

The most common programs for lower down payment mortgages come from the Federal Housing Administration (FHA). Most FHA loans require a minimum 3.5 percent down and a decent credit score in order to qualify which makes them appealing for first time home buyers. Additionally, these types of loans are federally insured to reduce the risk of loss if a borrower defaults on their mortgage payments.

Fannie Mae offers two additional low down payment options that are not packed by the FHA: HomeReady® mortgages and Conventional 97 mortgages. Both options allow for a 3% down payment. HomeReady® mortgages are designed for creditworthy, low- to moderate-income borrowers, with expanded eligibility for financing homes in designated low-income, minority, and disaster-impacted communities. Conventional 97 mortgages are designed to help creditworthy home buyers who would otherwise qualify for a mortgage but may not have the resources for a larger down payment.

If you meet the eligibility guidelines, you may be able to qualify for a home loan with a zero down payment through the Veterans Affairs (VA loan) or the Department of Agriculture (USDA loan) programs. Both programs have eligibility restrictions that are outlined on their websites.

In addition to FHA and VA, there are state and local assistance programs that help people get a home loan with low down payments.

Zero Down Payment – How To Buy A Home With A Low Or No Down

How to Buy A Toronto GTA Home with a Low or Zero Down Payment?

Buy Zero Down with Cash Back Mortgages Video

You may have owned a Home before and are presently Renting or maybe you are a First-Time Homebuyer and need a way to break into the Housing Market but held back because you thought you required a $20,000, $30,000 or even more for a downpayment.

Dash For Zero Down i.e. Buy with 5% down payment,

Take advantage of Bank Cash Back Program + Get Money for Renovations

On Approved Credit [OAC], Certain Conditions Apply.

Industry insiders have prepared a new special report entitled, “How to Buy a Home With Zero Down Payment”, and reveals how this cash-back and innovative program can get you into the housing market immediately and with absolutely low or no downpayment.


What is Cash Back Mortgage for Down Payment?

Zero down mortgage

How does a Cash-Back Mortgage Work?

Some Banks have a Cash Back Program.

Banks give Buyers certain percentage of purchase price as a Cash Back Mortgage.

These are higher interest rate mortgages.

Some Lending institutions offer cash back mortgages and

affiliate themselves with a program called Purchase Plus Improvement.

Your credit has to be good.

Mortgage is for a fixed term.

If you break the mortgage term you will have to return the Cash Back.

Additionally, you have to qualify for an amount with posted interest rate.

Some lenders will give you the Cash-Back immediately after closing.

Few lending institutions may allow the initial down payment from your line of credit.

Zero down mortgage

Is Cash Back Mortgage A Good Deal?

Let’s review the above with an example:

Using $100,000 as bank mortgage amount and upto 5% as cash back.

Cash back amount = $5,000 [i.e. 5% of $100,000]

Let’s assume the 5 year posted interest rate is 4.74%

Monthly payment amount would be $566.89

Assuming interest rate to be around 2.89%

Monthly payment amount would be $467.62

is $99.27 per month [i.e. $566.89 – $467.62]

[i.e. $99.27 X 60 months = $5,956.20 – $5,000 cash back amount = $956.20]

5 times i.e. $5,000 for a $500,000 mortgage.

Now at the same time consider

the appreciation of the property value during this 5 year term.

market conditions and your ability to bear the mortgage amounts.

Zero down mortgage

Is Cash Back Mortgage Good or Bad?

With hot Toronto Real Estate market where you will only pay $5,000 extra

as in the example above and the value in 5 years could easily increase

substantially it’s a no brainer that it can be a great deal.

What’s the catch with Cash Back Mortgage?

The interest rate is higher.

You will have to qualify for this high interest rate mortgage.

The mortgage is a fixed term mortgage.

You will have to repay the Cash Back if you break the mortgage term.

Should you stay away from Mortgage Cash-Back offers!

Yes, If you cannot afford the per month mortgage amount as it is higher.

Yes, if want to qualify for a higher mortgage amount.

Yes, if you have your own down payment.

Zero down mortgage

How To Buy A House With No Money Down as a First-Time Home Buyer?

Here are a few options for a first-time homebuyer:

Borrow initial down payment funds from family, friends etc.

First-Time Buyers can use their RRSP for the downpayment.

Some lenders will allow using your line of credit for initial deposit.

Repay funds with cash back thereby prompting Buy with Zero Down Payment.

Do you want to take advantage of this hot Real Estate market?

Are you better renting and not sure where the market is heading?

Can you ponder on this; my mortgage amount is a kind of forced saving?

Are you bogged down with interest rates and not wanting to dwell further?

Zero down mortgage

So How can I Buy a House with Zero Down Payment and No Closing Costs?

Regarding closing costs, this amount you have to come up by yourself.

Consider first and last month rent, additional savings, borrow from family, friends etc.

Sometimes you may qualify for an extra cash back to augment this amount.

Closing costs are generally 1.5% of the purchase price.

You also get a refund being a first time buyer.

If you do all the math, it is not difficult to come up with this amount.

For initial down payment, you can use your RRSP.

Under the Home Buyers’ Plan [HBP]

you can take out up to $25,000 per person from your RRSP.

Some lending institutions will allow you to take out money from your line of credit.

You can take a cash back mortgage and

repay your line of credit hence prompting buy with zero down.

Zero down mortgage

How to Purchase a House with Cash Back Mortgage + get Money for Renovations?

This one is interesting if you foresee minor renovations or are indulging in a fixer-upper.

Some Lending institutions offer cash back mortgages and

affiliate themselves with a program called Purchase Plus Improvement.

But you are only buying a property whose purchase price is $450,000.

Under this program you may qualify and can get money for renovations.

to fulfill their dream of owning a home.

Feel free to call / email me regarding your unique situation.

You will feel glad you called and thank yourself later.

Zero down mortgage

Act Now:

Buy Zero Down with Cash Back Program + Get Money for Renovations

On Approved Credit [OAC], Certain Conditions Apply.

Zero down mortgage2. Call Now For: Scintillating Mortgage Rates |

Pre-requisite: Buyer Representation Agreement.

3. Click Below For Viewing TREB MLS® System

Homes For Sale Hot NEW Listings that interest you:

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How Much Down Payment Is Required for a Mortgage, Home Guides, SF Gate, zero down

How Much Down Payment Is Required for a Mortgage?

Zero down mortgage

The down payment can be the biggest hurdle to buying a home.

Mortgage lenders typically are willing to lend 80 to 97 percent of a property’s value, so you’ll need a down payment between 3 and 20 percent. You need a bigger down payment if you have poor credit or do not want to pay private mortgage insurance. Military personnel and low-income rural home buyers may qualify for a government-backed program with no down payment at all.

FHA-Backed Mortgages

Borrowers can qualify for a mortgage insured by the Federal Housing Administration with just a 3.5 percent down payment, which is $10,500 up front for a $300,000 home. The drawback is that you have to pay mortgage insurance – a onetime payment at closing equivalent to 1.75 percent of your loan amount and an annual payment of 0.85 percent of the loan balance. You can refinance to remove MIP payments after you have 20 percent equity in your home. There’s a qualifying credit score of 580. If your credit score is lower than that, you need to put 10 percent down.

Veterans Affairs Mortgages

If you’re an eligible veteran or active member of the military, the VA will finance 100 percent your mortgage. You don’t have to put anything down. There’s a funding fee that averages around 2.15 percent of the loan amount, but you can roll this into the loan so there’s nothing to pay up front. There’s no minimum credit score, although some lenders have their own standard, and no mortgage insurance. This can knock about $100 or more off your monthly payment compared to other types of loans.

Department of Agriculture Loans

The USDA promotes home ownership in rural areas by offering zero down payment loans to first-time home buyers who are buying a property in a rural area. Like the VA mortgage, there’s no mortgage insurance, but you have to pay a 2 percent funding fee if your down payment is less than 20 percent. There are strict income criteria because the program is only available to buyers who make less than 115 percent of the area’s median income. Rural communities around the Bay Area qualify for USDA funding. Check the eligibility map on the USDA website to find your location.

Conventional Mortgages

The HomeReady and Home Possible Advantage programs from Fannie Mae and Freddie Mac require a 3 percent down payment, although you can choose to put more down. Anything below a 20 percent down payment requires private mortgage insurance of around 0.5 percent of the loan balance. On a $300,000 mortgage, that’s an extra $150 each month. It is more difficult to qualify for a conventional mortgage because you need a minimum 620 credit score and a debt-to-income ratio – the amount of your monthly outgoings compared to your monthly income – of around 36 percent in most cases. The FHA requires a debt-to-income of 43 percent.

Reasons to Save a Bigger Down Payment

It may sound obvious, but the bigger your down payment, the smaller your loan will be – and smaller loans equal smaller monthly payments. All lenders carry out affordability checks to make sure you can afford the monthly payments based on your income and obligations. If you only make a small down payment, there’s a risk that you might fail these checks because you’ll need to spend more on your mortgage payments each month. Saving a larger down payment makes you less risky for mortgage lenders. As a result, they usually offer better rates to buyers with large down payments.

References (6)

About the Author

A former real estate lawyer, Jayne Thompson writes about law, business and corporate communications, drawing on 17 years’ experience in the legal sector. She holds a Bachelor of Laws from the University of Birmingham and a Masters in International Law from the University of East London.

Buying Down Your Interest Rate, The Truth About, 0 down mortgage.#0 #down #mortgage

Buying Down Your Interest Rate

Many borrowers and prospective homeowners out there are looking for the lowest possible interest rate, even if it means pulling money out of their own pocket at the time of financing.

Though most borrowers usually opt for a higher mortgage rate to avoid paying closing costs when buying a home or refinancing, some savvy homeowners will pay the one-time fees and take a lower interest rate to save money over the long term.

Of course, this strategy only really makes sense if you plan to stay with the mortgage for a long period of time, as associated savings aren t usually realized for several years.

Buying Down the Rate

If you re working with a bank or mortgage broker, you can easily buy down your interest rate by asking for a series of different rates and associated costs. This is known as buying down the rate, and is common practice in the mortgage industry.

You may have seen mortgage advertisements for no point mortgages or zero point mortgages, and may be quick to jump on them. And though these no cost loans could serve you well to leverage your money, for borrowers who have decent asset reserves and plan to pay off their loan, buying down the interest rate may be a better idea.

Should you buy down your rate?

Deciding whether or not to buy down your interest rate can be tricky, but if you get your hands on a rate sheet, you can make the decision quite easily. Most mortgage programs have a system where you ll pay a certain amount in fee for a specified change in interest rate.

For example, if your interest rate at the par rate is 6.25%, but you d like a rate of 6%, you ll need to buy down that rate by paying mortgage discount points.

Mortgage discount points are a form of prepaid interest that can lower your mortgage rate if you so desire.

A rate sheet may look something like this:

Each rate has a corresponding price, which is simply displayed as a percentage of the loan amount. In the example above, the par rate would be 6.25%, as it has an associated price of zero.

How much does 1 point lower your interest rate?

If you look at the buy-down ratio for each rate, it isn t exactly a perfect science. Well, at least not to us non-bankers. Usually as the interest rate goes lower, the price to buy down goes higher, often disproportionately. This actually makes sense because it gets increasingly expensive to go well below typical market rates.

As you can see, someone could pay one point for a rate of 5.875%, but be asked to pay nearly double that to get the rate down another eighth to 5.75%. That probably wouldn t make much sense.

This is why it s important to decide on a pricing threshold where it makes sense to buy it down instead of chasing a certain rate.

For some reason, homeowners seem to have a specific interest rate in mind that they must have. It s foolish to go after a precise rate, especially when the cost associated may eclipse the actual savings you d accrue over time with the slightly lower rate.

Even if you have your heart set on X rate, you may want to see what the lender is offering, then compare your mortgage payment at different rates and consider the associated costs for buying down to those rates.

Note: There may be a limit to how many mortgage points you can buy based on the new QM rules, along with how low the lender is willing to go. It also gets to a point where it no longer makes sense to keep going lower because the cost becomes excessive.

Look at a comparison of interest-only mortgage payments on a $500,000 loan amount

Interest rate of 6.25% with a price of 0.00 Monthly payment: $2604.17

Interest rate of 5.875% with a price of 1.00 Monthly payment: $2447.92

Total monthly savings: $156.25

Total cost to buy down rate to 5.875%: $5,000.00

It would take roughly 32 months to realize the savings associated with the lower rate of 5.875%. It may be worth it if you plan on staying in your home over a long period of time, but if not, it might be wise to stick with a slightly higher interest rate at no cost.

Do the math to figure out which rate makes the best sense to buy down based on your long term plan with the associated property. Buying down your interest rate can be a great decision, but also a foolish one if you pick up and go after a year or less.

And remember, don t focus on an exact interest rate. It simply isn t worth it sometimes, especially when the price doubles to drop the interest rate a mere eighth or quarter percentage point.

USDA Mortgage Guidelines and Underwriting – Home Mortgage Guidelines, zero down mortgage.#Zero #down #mortgage

USDA Rural Development Guaranteed Mortgage Guidelines

This web site will explain the USDA Rural Development guaranteed mortgage guidelines. This is a 100% loan to value (100% LTV), government guaranteed home loan that is geared to help moderate income families.

As a side note, USDA also offers a USDA Rural Development Direct Mortgage for people with low to very-low income. The guidelines for the Direct loan are quite different so you should visit this site: USDA Rural Development Direct Loan

USDA Guaranteed Loan

The major benefits are:

  • 100% mortgage LTV based on the APPRAISED value
  • Zero down payment and no minimum contribution required.
  • No limit on seller concessions or gift
  • No mortgage insurance required
  • No reserves required
  • 30 year fixed rate only
  • Lenders must be USDA approved.
  • Low interest rates
  • Flexible Credit Guidelines
  • Property must be in a rural eligible location

In the not so distant past few people, including real estate agents and loan officers, were aware of this government program. Real Estate Agents, Lenders, and For Sale By Owners should use this 100 percent loan to the advantage of the buyer and the seller.

Not every home or buyer will qualify for this loan. If they do qualify they will be getting one of the top mortgages, with the lowest interest rates on the market today.

Here is a very short video that covers the basic qualifying factors. You should still review the rest of this site for more details:

The only disparaging issue is the Government operates on a fiscal year budget that ends on September 30th of every year. It can take a month or much more after September 30th for the new budget to be allocated. It is also possible to deplete the budget prior to Sept 30th, as it has in the past. Your loan could be held in limbo, with out closing, if it falls into this time frame.

Lenders usually have the option to close the loan without budget if they are issued a Loan Note Guarantee – Subject to Fund Allocation . Most lenders will not close with a subject to LNG. If this happens it becomes a waiting game.

We are not part of USDA Rural Development and we are not a mortgage lender/broker. We do not collect your information or sell leads. We put out this information because we believe in educating buyers so they don’t get ripped off in the market.

We have several other sites that cover the mortgage underwriting guidelines for FHA, VA, and Conventional Mortgages as well. The other websites we operate are listed at the bottom of this page.

As a buyer you should familiarize yourself with the guidelines of each mortgage product. Then you will know what program best meets your needs BEFORE you shop for a home loan. The more you know and understand the less likely it is that you will fall prey to people with a different agenda than your best interest.

If you have questions you can email us and we will do our best to help you find the answers.

How to Get Out of an Upside Down Car Loan with Negative Equity, upside down

How to Get Out of an Upside Down Car Loan With Negative Equity

Upside down mortgage

In the housing industry, it s called negative equity. In the automotive industry it s called being upside down. In both cases, it means the same thing: You owe more money on an asset than the asset itself is worth.

When you re upside down on a car loan, you can end up in big trouble because a car doesn t grow in value like a house often does. You can list a car as an asset on your balance sheet if you want, but in reality, it s not an asset or an investment. It s an expense.

If you re in this unfortunate position, you can t lower your payment by refinancing, and selling your property won t cover the whole loan. How did you get here, and what can you do?

Getting Upside Down on a Car Loan

To understand how to get out of trouble, you first need to understand how you got upside down on a car loan in the first place.

  • A car depreciates in value very quickly, especially in your first three years of owning it. When you buy a car with a low down payment or no down payment at all you immediately owe nearly the entire purchase price, but it s already worth less. For example, if you buy a $20,000 car and only put a thousand dollars down, you ll be upside down as soon as you drive the car off the lot. You owe $19,000, but the car is only worth $16,000.
  • It s easy to overpay if you don t do your research before buying a car. Your overpayment doesn t make the car worth any more in the fair market, so if you pay $24,000 for a car that s now worth $16,000 you re upside down and already facing a big problem.
  • It s not always your fault. When an unscrupulous car dealer takes advantage of you, you can end up owing more than you should.
  • When you add too many frivolous options to your car, you increase your final total, but not the value of the car. That s a recipe for being upside down even faster.
  • If you re already upside down on one car loan and you try to get a new loan, dealers will often roll the shortfall from the old car to the new car without even telling you.

Unless you re on high alert when buying a new or used car, it s easy to fall into these traps. In fact, it s almost certain that you re going to be upside down at some point. That s why many people don t even know when it happens to them. At first, it s not necessarily a problem.

When Being Upside Down Becomes a Problem

Being upside down on your car loan doesn t always require immediate attention. Sure, it s not good news, especially if it means you overpaid. But as long as you got a fair deal on your loan, and you make your payments on time, the expense of your loan and the value of your car eventually even out, usually in no more than five years. The imbalance might only be temporary.

The trouble comes when you can no longer comfortably afford your monthly car payment, whether it s due to unemployment or job loss, income reduction, or another major negative change in your overall financial situation. When you re upside down and can t cover your loan payment, you re in a tough financial place.

How to Get Out of an Upside Down Car Loan

The only real way to fix the problem of being upside down is by paying down the excess debt. You ll have to go through a few steps and make some sacrifices to manage the loan or raise the cash, but the process is worth your time. You can get out from under a payment you can no longer afford.

1. Move the Excess Car Debt to a Credit Line

Although many people would rail against using credit cards, moving the debt to a credit line might be the best option. If you re having trouble with a $600 monthly payment, moving to a more manageable rate on a $5,000 line can save you cash and buy you some time.

The key is to avoid more trouble. This plan only works if you can commit to the lower regular payments on a credit line. If you can, get a line with a low introductory APR, and pay as much as you can before the introductory period ends (i.e. 0% APR balance transfer credit cards). Consider using peer-to-peer lending networks like Lending Club or Prosper. A local credit union can also provide a personal loan at a reasonable rate.

If the credit line idea doesn t sit well with you, then you ll need to raise some cash. This means that you may need to sacrifice something else in order to cover the car payment. Selling major items like extra furniture or jewelry might help, or sell smaller items on eBay to raise money.

Don t count out the idea of selling the car, even though it won t cover your entire overage. If you owe $10,000 and you can sell the car for $7,500, the $2,500 will be much more manageable than paying your full loan. Keep in mind that your car will only continue to depreciate in value, so get as much out of the sale as you can.

When you need more income, the only answer is often to get a second job. It doesn t have to be a permanent arrangement, just a temporary fix until the car loan shortage is corrected. This situation might even be the push you need to start your own small business or find ways to make extra cash on the side.

Avoiding the Problem

Lets face it: Cars will always depreciate rapidly. As long as they have engines inside them, they re going to drop like a rock in price. Car dealers know it, and they almost always make more money when you finance. When you re ready for your next car, keep a few tips in mind so you can avoid being upside down on a car loan ever again.

The easiest way to avoid being upside down is to not have a loan at all. You might have to settle for an older car, but try to save enough cash to buy the vehicle without taking out a loan.

Someday, I hope to be in a position where I can save up enough money to buy a new car without it being any kind of strain on my finances. Wealthy people don t finance cars. They pay cash for them and drive them for a long time. Make it your goal to stop the cycle of going from one car payment to another. If you break that cycle, you ll be one step closer to achieving independent wealth.

Whether you re shopping for a new luxury vehicle or an old car with low mileage, take the time to save the way you would for a mortgage. Try to have at least 20% of the purchase price available in cash. This down payment will be your best defense against the horrendous depreciation that your new car will experience over the next two years.

3. Pay More Than the Specified Monthly Payment

If you re going to finance, try to get a five-year loan so your monthly payment will be small. Then, if you can, pay up to double the minimum payment. You ll pay off more of the principal earlier, which means you ll build up less interest. The faster you pay off the loan, the better.

4. Keep Up With Car Maintenance

Don t rack up mileage. Stay on schedule with oil changes and engine maintenance, and take care of the paint job with frequent car washes and cleanings. If the check engine light comes on, address it quickly so a bigger problem doesn t arise. Keep the interior clean. The better you treat the car, the higher the resale value will be. Make sure you can check off excellent condition when you look up the value.

Final Word

Being upside down on your car loan can be an extremely difficult and challenging prospect, but there is hope. By staying organized, disciplined, and employing some unique strategies, you can work your way out of this debt.

Are you upside down on your car, or have you ever been? How did you get in that position, and what did you do to get out and make things right? I d love to hear about your experiences and insights!

VA, FHA & USDA Home Loan Programs, First Time Home Buyer Loans, zero down mortgage.#Zero

America’s First Time Home Buyer Specialist

  1. Check out first time home buyer programs with zero to low down payment options.
  2. Get Pre-Approved for all the eligible loan options and get a pre-approval letter in your hand before you start house hunting.
  3. Request Pre-Screened Realtor in FirstHomeBuyers Network to assist you in your home search.
  4. Get contract on home and process your mortgage to obtain the final approval on your loan
  5. Close on your new home, get the keys, move in, order some pizza, kick off your shoes, and celebrate living the dream of being a homeowner!

You must start on the Road To HomeOwnership as early as possible because there are a lot of documents and information required to process a mortgage these days. There may be issues you need to address prior to buying a house and you need to give yourself plenty of time to financial ducks in a row to avoid major headaches later on. What are you waiting for? Live the dream now!

FirstHomeBuyers Program Advantage

We have over 25 years of experience helping first time home buyers achieve the dream of owning a home. Buying a home can be a daunting task but our mission is to educate you on the programs and guide you through every step of the process. We provide you with the advice, tools, tips, and resources so you can determine if owning a home is better than renting and whether homeownership is right for you. Once you set your mind on becoming a homeowner then we will do our best to get you pre-approved for the best loan option and payment to fit your budget. Don’t worry if you don’t qualify now because we can discuss actions you can take so you can purchase a home within the next couple months to a year. Our goal is to make buying your 1st home a simple, fun, exciting, and hassle-free experience.

Government Programs

Government insured loan programs such as USDA and VA requires no down payment and FHA requires a low down payment. Usually, people with fair to marginal credit may qualify for these programs.

  1. USDA Zero Down Program-Minimum 620 credit score and must buy home in small city or town.
  2. FHA Loan-Minimum 600 credit score with low down payment.
  3. Down Payment Plus Assistance Program-Get up to $6,000 down payment assistance.
  4. HUD Home Loan Program-FHA loan for HUD owned homes or FHA foreclosures.
  5. VA Loan-Zero Down Payment for Veterans and active personnel in Navy, Army, Marine Corps, Air Force, Coast Guard, and National Guard.
  6. Down Payment Assistance and Grant Programs-Get grant funds or down payment assistance for down payment and closing costs. Check your state for specific programs available.
  7. Dream Makers Program-get $5,000 grant if you are in the military
  8. Good Neighbor Next Door-Teachers, Firefighters, Emergency Technicians, Law Enforcement Employees, or Police Officers get 50% discount off home in targeted area.
  9. FHA Streamline 203k Renovation Loan-Repairs and home improvements may be added into rehab mortgage to fix up home. Great for foreclosures and short sales!

Conventional Programs

Some Conventional and Community loan programs have more flexible credit, income, and property guidelines and offer great alternatives to government financing.

  1. Fannie Mae HomeReady Community Program will help low to moderate income individuals realize the dream of homeownership.
  2. Fannie Mae 97% Program-Low down payment program with no income restrictions.
  3. Home Possible Advantage Program-1% down payment program with no income restrictions in targeted areas.
  4. Home Possible Neighborhood Solution Mortgage-Community lending program offers low down payment and more flexible credit guidelines to teachers, firefighters, health care workers, law enforcement officers, and military personnel.
  5. Fannie Mae HomePath Ready Buyerв„ў Program-Take the homebuyer education course and receive closing cost assistance toward the purchase of a Fannie Mae HomePath foreclosure.
  6. Fannie Mae NO PMI Program-NO PMI or mortgage insurance.
  7. Piggyback Mortgage Loan-Jumbo loan alternative which involves taking out 2 loans to avoid mortgage insurance with less than 20% down payment.
  8. 100% Gift Purchase Program-Fannie Mae program which down payment can be all gift.

Down Payment Calculator, Calculate Mortgage Down Payment, 0 down mortgage.#0 #down #mortgage

Mortgage Down Payment

A mortgage down payment is the amount of money you pay upfront when purchasing a home. A down payment, typically expressed as a percentage, is calculated as the dollar value of the down payment divided by the home price.


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What is the minimum down payment required in Canada?

The minimum down payment in Canada depends on the purchase price of the home:

  • If the purchase price is less than $500,000, the minimum down payment is 5%.
  • If the purchase price is between $500,000 and $999,999, the minimum down payment is 5% of the first $500,000, and 10% of any amount over $500,000.
  • If the purchase price is $1,000,000 or more, the minimum down payment is 20%.

Mortgage default insurance, commonly referred to as CMHC insurance, protects the lender in the event the borrower defaults on the mortgage. It is required on all mortgages with down payments of less than 20%, which are known as high-ratio mortgages. A conventional mortgage, on the other hand, is one where the down payment is 20% or higher.

According to a recent TD Canada Trust Home Buyers Report 1 , 30% of homebuyers plan to or have at least a 20% down payment, the point at which mortgage default insurance is no longer required.

The size of your down payment influences three things

The amount you put down at the beginning of your mortgage shapes three important outputs over the life of the mortgage:

  • The home price you can afford
  • The size of your mortgage and monthly payment
  • The amount of CMHC insurance you pay

1. Your down payment influences the home price you can afford

Because the minimum down payment in Canada is 5%, this benchmark is used to determine your maximum affordability. Ignoring your income and debt levels, you can infer your maximum purchase price based on the size of your down payment. Because the minimum down payment is a sliding scale, the calculation depends on whether your down payment is more or less than $25,000.

If your down payment is $25,000 or less, your maximum home price would be: down payment amount / 5%. For example, if you have saved $25,000 for your down payment, the maximum home price you could afford would be $25,000 / 5% = $500,000.

If your down payment is $25,001 or more, the calculation is a bit more complex. You can find your maximum purchase price using: down payment amount – $25,000 / 10% + $500,000. For example, if you have saved $40,000 for your down payment, the maximum home price you could afford would be $40,000 – $25,000 = $15,000 / 10% = $150,000 + $500,000 = $650,000.

Naturally, as your affordability is also a function of your income and debt levels, you should visit our mortgage affordability calculator for a more detailed analysis.

2. Your down payment shapes the size of your mortgage and monthly payment

A larger down payment reduces the size of your mortgage, and, therefore, the monthly payment and interest you will pay over the life of your mortgage.

3. Your down payment determines the amount of CMHC insurance you pay

Your CMHC insurance premium, calculated as a percent of your mortgage amount, gets smaller as you increase your down payment. To learn more about CMHC insurance and how it is calculated, please visit our CMHC insurance page.

USDA Home Loans from the Specialists at, 0 down mortgage.#0 #down #mortgage

Start Your Quote for a USDA Loan

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Low Rates & $0 Down

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Better Terms than FHA

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Not a Farmer’s Loan

What is a USDA Home Loan ?

The USDA Loan is a home-mortgage option available to rural and suburban homebuyers. USDA Home Loans are issued by qualified lenders and guaranteed by the United States Department of Agriculture (USDA)

USDA Home Loans, also referred to as the USDA Rural Development Guaranteed Housing Loan and the Section 502 Guaranteed Loan , are particularly favorable to those living in rural or low-income areas. USDA Loan offer $0 money down, lenient eligibility requirements and competitive interest rates – due to the loan being guaranteed by the USDA.

USDA mortgages stand alone as the only mainstream zero money down program available to borrowers that have not served in the military. Eligible borrowers will be hard pressed to find a home loan program that offers more favorable terms.

$0 Down, 100% Financing

USDA Loans are one of the last $0 down mortgages with 100 percent financing, resulting in low out-of-pocket costs and one of the most desirable loan programs.

More Homes Now Qualify

The USDA’s definition of “rural” is largely liberal – meaning many in small towns, suburbs and exurbs of major U.S. cities meet the “rural” requirement.

Lenient Requirements

The USDA has desinged the USDA Loan to provide homebuyers with lenient eligibility requirements that help low to moderate income families purchase a home.

Competitive Rates

USDA mortgage rates are often lower than comparable conventional 30-year fixed mortgage rates resulting in a better deal as compared to FHA or conventional loans.

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Basic Eligibility Requirements

  • Homebuyers should show intent to repay the loan
  • Homes purchased with a USDA Loan must be used as the primary residence
  • Credit history should be in good standing
  • Homebuyers should show a history of receiving stable income

USDA Loan Eligibility

USDA Loans used to be considered “farmers loans” but that is simply not the case anymore. Just about anyone looking to purchase a home outside a major metropolitan area can qualify for a USDA Loan.

Some of the eligibility standards that determine if you qualify for a USDA loan for your home include what county and zip code the home resides in, your current income and credit history, as well as the number of dependents you can claim. Because these guidelines are very specific, it is important to work with a company that has experience dealing with USDA government financing to help determine your eligibility.

Frequently Asked USDA Loan Questions

We’ve helped thousands of families learn about the USDA Home Loan process and have seen our fair share of questions along the way. We have listed a few of the most common below; however, if your question isn’t answered, please contact us at 877-701-8732.

Every homebuyer interested in a USDA Loan should speak with an approved USDA Home Loan lender to determine if they qualify. To do this, fill out the form above or call 877-701-8732 and speak with a USDA Loan specialist.

The USDA started this program to help those in rural areas achieve affordable home financing. With this being the case, the USDA wants to ensure those with the greatest need are served by limiting eligible properties to those that are located in rural, or suburban, communities. Additionally, the USDA Home Loan is only for primary residences – meaning rental properties and vacation homes are not eligible.

USDA Loans feature no down payment and lower mortgage insurance costs than both FHA and conventional options – saving homebuyers monthly, as well as out-of-pocket costs.

Using a USDA Loan?

About Us

USDALoans.com was established in 2008 with one goal in mind – make the public aware of the benefits and advantages of the USDA Loan program. USDALoans.com has been recognized as a top USDA Home Loan provider and serves potential homeowners across the nation interested in $0 down, 100 percent mortgage financing.

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USDALoans.com does NOT act as a lender, credit provider or mortgage broker and is not affiliated with any governmental agency. USDALoans.com is compensated to provide marketing services for a network of licensed mortgage lenders, brokers and mortgage loan originators. One or more of these Participating Lenders will contact you with additional information regarding your request. For a full list of Participating Lenders Click here. By submitting your information you have agreed that your information will be provided to a Participating Lender who will contact you, but does not mean you will qualify for a USDA loan. USDALoans.com will not accept charge or seek fees of any kind from you.

USDALoans.com does not distribute mortgage products and any terms or conditions will be offered by the USDALoans.com participating lender that you choose as a consumer. Please note that USDALoans.com is not available in Arizona, New York or Virginia or to borrowers in those states.

USDALoans.com participating lender for this search is Luxury Mortgage Corp. NMLS ID #2745. To view this participating lenders licensing click here.

For a full list of participating lenders click here.