Although the new store for housing in the Bay Area has been hurt in some ways, there is room for optimism as markets shift to add value and offer deals to help Americans buy homes. Fha is a program that offers many great benefits and affordable interest rates and, quite frankly, our news media probably has not gone on record about how this financing program is helping people in great numbers today. I have been working with clients recently in Antioch showing homes priced from ,000 to 9,000. These are newer, gorgeous 3 bedroom, 2 bathroom houses in great neighborhoods.
I am excited to tell the Bay Area home buyers about the new Fha (Federal Housing Administration) financing. For today's consumer it means that in spite of all that is going on in the real estate store this loan is a very straightforward, superb and easy to get loan program. This loan will help today's buyer get into a home and keep it. So, no matter what the media says about getting loans being a challenge ... I say it just isn't so!
Let me delve right in and share some of the benefits with you.
First of all ... Down payment for this loan is easy. Fha requires a 3.5% down payment. This can be a gift from a family member, too. No wage limits!
The wholesaler can prestige you 6% of the purchase price towards your windup costs.
The first mortgage guarnatee superior (Mmi or Pmi) can be financed in the loan, then you pay towards the next year monthly.
The Fico scores for this loan can be as low as 580 and I have heard several lenders say that they have been able to do loans with a 560 prestige score (There were offsetting circumstances, like very exiguous debt).
In the Bay Area (check with the lender for your area) you can go as high as a 5,000 purchase price if you qualify for a monthly payment.
The ratio of wage to debt (money advent in to money going out) is flexible based on the lender's guidelines and your private income, debt and prestige history.
Example:
0,000 purchase price
,500 down payment
3,500 loan amount
8,000 loan estimate if you finance Mmi (This is an example, as Mmi rates vary)
,000 wholesaler prestige towards windup costs
With this scenario you can buy with Very exiguous or No Money out of your pocket if you are able to collect a gift for the down payment.
Rates Are Going Down Again!
I have seen interest rates at 5.75 percent! Interest rates can vary based on lenders, points (money you pay at windup to lower the interest rate) and other factors.
Example of the total monthly payment of principal, interest, taxes, fire guarnatee and Mmi based on the above scenario with an interest rate of 5.75 % , and a 30-year, fixed rate loan.
Principal and Interest - ,155.47
Property Tax - 208.33
Fire guarnatee - 58.33
Mmi guarnatee - 100.00
Total per month - ,522.13
Interest And Tax'S Are Tax Deductible!
If that payment concerns you, let's go one step further. When we buy a house it now becomes a tax deduction, and one of the largest that you can use most times! If you are in a 28% tax bracket (Which you probably are if you qualify for this loan. However, your own tax accountant will need to give you the exact estimate of the deduction. This explanation is for the theory of deductible interest and effective after-taxes house payment, and is not to be misconstrued as tax advice), you can deduct approximately 0 per month or ,200 per year.
Total payment per month ,522.13
Tax deduction: 350.00
Payment after tax 1,172.13
Now you can convert your W-2 to reflect the tax deduction and start bringing that money home monthly. So the money that you are currently paying without buying a home, you now use to help you make the payment (or go to the movies) instead of paying it to the Irs (we call it "urse" at our house!!). Then, at the end of the year, you break even with the Irs. You neither owe money to the Irs nor get money back. You break even with your tax debt.
The beauty of the deduction is that you can go to your tax accountant after you have been pre-approved. Tell him you are going to buy a home at 0,000 and you want him to figure out the deduction for you. If you feel Ok with the ,522.13 payment, then you just get to get more money back from the Irs at the end of the year.
This is a historical time to buy homes! Many of you reading this may have thought you would never be able to buy a home! Don't let this time pass you by!
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