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Home > Banking News > Lenders Accommodate All Types of Buyers With Home Credit Loans
Lenders Accommodate All Types of Buyers With Home Credit Loans
Low down payment loans a viable option for many buyers.
Minneapolis, MN (PRWEB) November 14, 2005 -- Home ownership is a common tenet of the “American Dream” - ownership that brings a sense of security, community, and investment (not to mention major tax benefits). It’s no wonder the housing market has exploded in recent years with prices higher than ever. Are homes affordable for everyone? What is credit process in home buying? Who is qualified?
Traditionally, lenders have required roughly 20 % of the cost of the house as a down payment, and many people struggles to accumulate this amount of cash. More recently, lenders have implemented a “low down payment loan” that requires much less than a 20 % down payment since mortgage insurers are willing to cover the claim on the house provided the borrower pays a fee.
Criteria provided by the Federal Citizens Information Center details qualifications of low down payment loan applicants:
• Sufficient income to support the monthly mortgage payment.
• Enough cash to cover the down payment.
• Sufficient cash to cover normal closing costs and related expenses (explained below).
• A good credit background that indicates your payment history or "willingness to pay".
• Sufficient appraisal value, which shows the house is at least equal to the purchase price.
• In some instances, a cash reserve equivalent to two monthly mortgage payments.
It’s important to understand how much mortgage you can afford and what kind of mortgage will be best suited for your situation and lifestyle. A consultant with the bank or lender should present multiple options based on the information you provide. For your initial meeting, you should bring the following:
• A purchase contract for the house, if you have one.
• Your bank account numbers and the address of your bank branch, along with checking and savings account statements for the previous two to three months.
• Pay stubs, W2 withholding forms, tax returns for two years, or other proof of employment and income verification.
• Divorce settlement papers, if applicable.
• Credit card bills for the past few billing periods, or canceled checks for rent or utility bill payments, to show payment history and amount of revolving debt.
• Information on other consumer debt such as car loans, furniture loans, student loans and retail/credit cards.
• Balance sheets and tax returns, if you are self- employed.
• Any gift letters, if you are using a gift from a parent or relative or other organization to help pay the down payment and/or closing costs. This letter simply states that the money is in fact a gift and will not have to be repaid.
Previous credit history may affect the willingness of the lender to make a loan, or it may affect the interest rate at which the loan will be granted. In the end, the prospective lender cares most about two factors regarding prospective clients – their ability and willingness to repay the loan.
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