(First Time Home Buyers may qualify for Affordable Housing Programs)

For many first time homebuyers, saving for a down payment can be difficult.  With 100% financing, this hurdle has been removed.

Qualifying for 100% Financing                                

When offering 100% financing, the lender is taking more risk than a traditional loan.  Therefore the process of qualifying for 100% financing can be more intensive.  Consider the following factors:

Credit

Credit history must be good.  Prospective borrowers should review their credit report with scores from all three bureaus.  This type of report can be obtained by contacting First Equity at 734-475-0270 or 800-557-0270. Or you can order your credit report now.

Income

Borrowers must have a stable source of income and a reasonable balance between income and debts.  Although programs may vary, generally the total debt, including the new house payment, should not exceed 42% of gross (pre-tax) income.

Reserves

Reserves are a liquid source of cash that a borrower can tap into in an emergency.  Although reserves are not always required, sometimes having reserves can help a borrower qualify.  The most common forms of reserves are IRA or 401K.

Collateral

The home being purchased will be appraised to determine fair market value.  Sometimes inspections will be required, such as roof, well and septic.  A home that is not in good condition may not be eligible for 100% financing.

What does it Cost?

After determining if the borrower can qualify for 100% financing, the total cost must be considered.  There are 4 basic components:

Closing Costs

Fees and costs are incurred at closing.  Generally these costs are:

	Application Fee
	Appraisal
	Title Insurance
	Closing Fee
	Recording Charges
	Survey

Other legitimate fees may include fees to government agencies and upfront PMI (mortgage insurance).  Fees such as origination fees and points may be negotiable.

Prepaid Items

These are items that are paid at closing and monthly throughout the course of the loan. 

	Property taxes
	Homeowners insurance
	Mortgage insurance

The amounts can vary widely from home to home.  Your loan officer can assist you in estimating these up front charges.

Interest Rate

The interest rate for 100% financing depends on certain factors.  Some programs may have a slightly higher than market rate because of the increased risk.  Also, interest rates fluctuate daily.  Your First Equity representative can offer you a rate lock at the time of application which will guarantee your agreed upon rate at closing. 

Monthly Payment

Your payment will include

	Principal
	Interest
	Property taxes
	Homeowners insurance
	Mortgage insurance (in some cases)
	Monthly condominium or association fee, if buying condominium apartment

Before making an offer on a home, ask your First Equity representative to help you estimate your monthly payment for the particular home in which you are interested. 

Call (800) 557-0270 for more details.