Buying a house for the first time can often present many challenges. Some first time home buyers don't have a lot of savings for downpayment and closing, while others don't have a good credit. Here are some of the most common issues with have encountered when working with first time home buyers:
1) Buying a house with no money down or very little money down.
While traditional banks and lending institutions no longer offer "no money down" or 100% financing, there are some options for buying a house with a very small downpayment:
- SONYMA - State of New York Mortgage Agency offers downpayment assistance loan (DPAL) - 3% or up to $15,000 of the purchase price. This program is geared towards first time home buyers (those who did not own their primary residence in the past 5 years). This is a no interest, no payment loan with is offered on top of 97% SONYMA financing. This loan is forgiven by SONYMA - as long as the borrower remains in the property for at least 10 years and keeps the SONYMA financing in place.
- FHA - Federal Housing Authority - the minimum downpayment requirement is 3.5% of the purchase price of the property. FHA is also lending to borrowers with less than perfect credit.
- HomePath Financing by Fannie Mae - offfered only on properties owned by Fannie Mae (a US government agency) - features low 3% downpayment requirement, no mortgage insurance, and seller contributions. Available only on move-in ready primary residences and investment properties.
- VA Home Loans - offered exclusively to the members of US military - these loans are the only 100% financing mortgages on the market. VA loans also don't require PMI.
2) Adding closing costs to the mortgage
Home buyer can often finance the closing cost of the home purchase. This is done by using a "sellers concession" - the borrower increases his offer on the property by the amount he/she would like to use for closing costs, and in turn asks the seller to make those funds available to cover closing costs. This can only be done if agreed to by the seller, and if the property will appraise for the the purchase price including the sellers concession.
3) Borrowing money for home purchase from your 401k retirement savings plan
Depending on your plan rules, you might be able to borrow money from your employer-sponsored 401k plan without any penalties for an early withdrawal.
4) Downpayment gift from a family member
Having a rich uncle, or well-off parents, can come in handy when it's time to buy your first house. You can use a gift from relatives to raise your funds for a downpayment.
We work with many reputable lenders and mortgage professionals well versed in all kinds of financing available to Staten Island home buyers. Contact us today at 718-FOR-SALE for free help and guidance in becoming a homeowner.