No Down Payment Loans

I received an e-mail joke today about “You know you’re from California when you make $250,000 a year and you still can’t afford to buy a house.” This isn’t true…yet.
The biggest problem in our housing market is the inability of a first time homebuyer to buy their first home. This problem effects more than just the first time homebuyer, it effects existing homeowners and the entire real estate industry. Think about it for a minute, if the lowest price home can’t be bought by the first time buyer, then how are the people that currently own that home going to be able to buy their move up home? The daisy chain effect takes over and every homeowner is affected.

The biggest problem that hurts the first timer is the lack of a downpayment. Most people that I interview and pre-qualify for their purchase don’t seem to lack the income levels needed to buy their first home, what they lack is cash for the downpayment and closing costs. An historical note here is the Federal Housing Administration (FHA) was created partially to solve this problem.

Unfortunately, FHA programs aren’t effective in our area due to the low loan limits that FHA allows. Fortunately many lenders, and some local government agencies, have stepped in to fill this void. There are programs available for 100%, or even 103% financing- this allows not only for no downpayment, it also provides much of the closing costs. Some of these programs don’t even require spotless credit or income verification! Remember though, as with most things, the less cash/information that you put towards the transaction, the more you will pay for that privilege through a higher interest rate.

For information on the “100% financing” programs available, give me a call.

Interest rates for loan amounts under $300,700 as of 8/20/02 (a.m.) are:
30 year fixed 5.875% (APR 6.159%) payments are $1,778.75/mo.
15 year fixed 5.125% (APR 5.592%) payments are $2,397.54/mo.