I am approved for a home loan but only with a down payment.At this time we don't have any money to put down.

Question

I was told by the loan officer that I could get a 2nd mortage loan to cover the down payment.Does anyone have any information about this?

Should I try for this or just work on our credit score until it reaches at point where we could get 100% finacing?

Answer 1

My husband and I were truly blessed we we bought our home. There is a program called Ameridream and if you are a first time homebuyer or a minority, the government will cover your downpayment. No gimmicks or paypacks. It was awesome. We saved 5k on the downpayment. We got an interest rate of like 6% and if we did a 80/20 the rate would have been 7.5%.

Answer 2

I hope you are not getting confused with so much information!

Here is a simpler explanation:

Ok.....if you are approved for a loan but requires you a down payment that means you are probably getting an loan for 80% of the value of the purchase and the 20% will probably have to be coverd by Private Mortgage insurance and your down payment.

If your so called "loan officer" said he could get you a 2nd loan that mean he is trying to get you financed the first 80% loan and the 20% is covered by the 2nd loan and your down payment.

If you want 100% financing you want a first loan for 80% and the second for a the rest of the 20% to complete your 100%.

Now my advice to you: BE CAREFUL!!!!

Interest rates are expected to continue to go up until the end of the year to fight inflation so MOST likely your 2nd loan will be a variable loan and you will be in deep trouble if you cannot come up with the ever growing monthly payment. If your so called "loan officer" was a good mortgage consultant, he would have given you different options and given you a good advice to try to fix your loans. Also he should have analized your situation and given you a game plan to help you better your score.

I would advice you to better you score and save some money because homes are not going anywhere soon. The market is slow anyways. Remember Real Estate is the best investment you will ever make in your life so you need to treat it like such

If you need more useful about buying a home you can read this article titled "Buying a home: gettin started". You will find it in the issue of May 2006 by following this link http://jrealestate.blogspot.com

You will also find some useful articles about credit.

Good luck

Answer 3

After reading all the feedback - You must be totally confused.

A 100 percent loan - is not totally out of your reach - There are FHA programs, payment assistant programs to help you. Look at your middle credit score, if you do not know your credit scores - have your lender tell you, or pull your credit from the 3 credit reporting agencies - BUT the person you are working with should tell YOU.

Lenders look at the middle score to qualify a person - and if your credit is low, than you will be going SUB-Prime, and any amount over 80 percent does not have MI - There are alot of companies I underwrite for that does NOT charge MI - normally the rate is slightly higher. Say you got qualified and your rate was 8.50 at par (Par, means that is what rate the lender quotes you, with no addon's to to the rate for the lender to make pts on the back - some Lo"s add pts on the rate to make their money - instead of charging it up front). The 8.50 does not have MI included.

FHA loans have MI included, Conforming A+ borrower's loans have MI included, but the rates are better starting in the mid to high 6's (with rates going up.) The more money you borrow - the higher the rate normally. There are alot of factors involved.

With a government loan - collections and judgements will have to be paid (most ppl do not know that) but for FHA it is true....

ALSO -

Example:
Decide on how much you want to spend, if you want to escrow the taxes and insurance. Say the taxes are 1200 a YR and insurance 800 a year (just an estimate, ok) That is 2,000 a year divided by 12 = 166.66 If you paid 1,000 a month now - (166.66) your P/I Principle and Interest would be 833.34. Now you decided on the price range you are looking into. If you have great credit, a 1 loan at 130,000 at a rate of 7 percent over a 30 year time would be 864.89 - This is just a estimate - ok -

It greatly depends if you need help with closing cost, (The seller could do Seller Help toward your closing cost). If that is the case, I normally tell my clients NOT to hackle over the price, since you are asking for closing cost help - especially if the home is thur a realitor, and the seller has to pay the realitor their fee which runs from 2-6 percent of the selling price, and you ask for 4-5 percent toward closing cost -assistance) Follow me so far??

Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score.

Try to find someone (broker) that will pull your credit one time, and submit your loan application to company's that will go off his credit report. By the way, a loan application is called a 1003, and they will issue you a GFE (Good Faith estimate, with-in 3 days, that is per the RESPA laws, and the TIL (Truth in Lending). This will tell you the up-front closing cost (etc) associated with your loan. This is a estimate only - not the final - but it does help you figure things out.


Good Luck, and if I can help in any way check out my web site, for links to all the credit reporting agency's and other useful information.

Answer 4

I am in the process of buying my first home right now so I will give some things I have learned along the way. You can not buy a fixer with an FHA loan. It has to be pretty much move in ready. A lot of forecloses are trashed! If someone stole the air conditioner, dishwasher etc those things have to be replaced before closing. Sometimes the bank will do this but sometimes they won't. FHA loans require 3.5% down. The only "grant" I know of to cover the down and closing costs is the Schools Facility Fund but they just cut it off the other day. It may become available again in the future but not right now. The only other option you have would be a conventional loan but with those you need 20% down. Good luck hun!

Answer 5

These piggy back loans were very popular last year.....

Your first mortgage might be 80% of the purchase......let's say 80K on a 100K purchase......You get a second home equity loan for the remaining 20% and buy the house.....

With interest rates going up, do you really want to risk having a 1st and 2nd on your home.....either lender can foreclose, not just file a lien.......

I would recommend a different loan officer and institution...There are too many options out there and quite frankly, the hard truth is if you haven't squirreled money away PRIOR to applying for a home loan, you certainly don't want TWO home loans....

If you finance more than 80% of the purchase price, you get hit with required PMI (private mortgage insurance).....it runs approx $45 for every $1,000 house payment.....

you want to determine if you'd rather have one loan w/ PMI or two loans, where the 2nd may be more than the PMI payment alone.

Answer 6

Has the loan officer told you where you are going to get this second mortgage?

If your loan officer though you would qualify for 100% financing, they would be securing the second loan for you.

There is also the option of a seller-held second mortgage. This is where the seller finances part of the purchase price.

Get clarification about how your situation is being handled.

Also, ask your loan officer exactly what you need to do to improve your credit and qualify for a loan with no money down. Don't expect your credit to just get better on it's own.

Answer 7

It sounds like you're being qualified for an 80/20. 80% of the purchase price will be the first mortgage and 20% of the purchase price will be the second mortgage. It ends up being 0% down, or 100% financing. You need to work with a consultant that is going to explain things a bit better to you...the fact that you don't know how your financing is set up is not a good thing. Switch lenders now!

Answer 8

100% financing is very hard -- lenders look supeiciously at someone who has no skin in the game. It makes them question how likely you are to make payments if you nothing to lose. You can try using a 2nd to cover the equity, but it will cost lots. Oh, and the loan officers do not give 2 sh!ts if it costs you money, because they're only interested in their commission.

Answer 9

If you can get approved for the 80% you should be able to get approved for the other 20% one way or another. If you are in Wisconsin, Colorado, Florida, or Minnesota I can help you on this. Just e-mail me the loan info amount, credit scores, income numbers that sort of stuff. Good luck

Answer 10

I know of a program that requires very low down payment with competitive mortgage rates. The credit score requested is also low. I bet that this program can be very helpful to you. E-mail me and I will give you more details. The program is in effect in all states except Hawaii.