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Here are reasons why you shouldn’t pay retail mortgage rates from your banks, credit unions, and mortgage companies: 

Many home owners looking to improve their situation by calling their local bank. They are quoted rates that are specifically targeted to the homeowners themselves. This is very similar to prices listed at a department store. What they may not know is that most banks have two lines they offer. Retail and Wholesale. Wholesale rates are offered to mortgage professionals only and are typically 1/4 to 1/2 a percentage point lower. This is because the lending institution does not have to pay for advertising and staff to complete the loan transaction . The mortgage professional works for the borrower. Utilizing a mortgage professional to get the lower rate (and in many cases) favorable terms can save the homeowner tens of thousands of dollars over the life of the loan.

It is not unusual for a top notch mortgage broker to be able to offer an identical loan program from a major mortgage lender (Wells Fargo, Washington Mutual, Countrywide, etc.) with lower fees or rates than if a consumer were to go directly to that same lender

The fees that brokers charge will vary from one to the next, as well as the loan program that they think is best for your situation. Know that different brokers work with different lenders, and have different experiences with those lenders. If you are wondering about the loan program and fees that your broker is offering, call me today at to see how I compare.

Most brokers work with a large number of lenders, often in the hundreds. They use their expertise and past experience to ’shop’ all of those lenders for a loan that is right for you. If you wanted to do the same thing, it would take an enormous amount of time and research. By working with a broker, you can save yourself a lot of trouble. And since the broker gets your mortgage at a discount rate, you won’t pay any more than you would at the bank. It’s very similar to how retail stores buy their products in large quantities at a low price, and then charge you a higher price. It’s how they make their profit. But that doesn’t mean that you’re paying more than you would somewhere else.

The local bank also does not normally offer the flexibility of a mortgage broker. Mortgage brokers can move your loan over to a different lender if there is a problem or if interest rates drop. A local bank cannot do this with there in house programs.

Credit scores have become very important to consumers for a variety of different things. Your credit score determines whether you will be, approved, declined, required to place a large down payment, or have to obtain good or very unfavorable terms for not only mortgages, home loans and cars, but for a variety of other things as well. Your credit and credit scores can now play a major role in determining what premiums you pay for homeowners and auto insurance, whether or not a utility company (phone service, gas service, electric, etc…) will require you to place a deposit down to get service turned on (and how much of a deposit), your rate and determine whether you will be approved or declined on personal loans and credit cards, whether or not you are able to rent an apartment or home, amongst many other things. Many employers now look at a potential employee’s credit report before hiring them. Therefore, you can see how credit and credit scores can play an important role in your life and with bad credit it can force you to pay higher interest rates, higher payments and higher premiums on numerous different items. There are many factors that help contribute to determine a persons credit score that you will learn about here.

The number of open accounts you have influences your credit score. Less than 3 or more than 5 can decrease your score.

The companies that determine your score do not fully disclose all the inner workings of what goes into your score. Granted they tell you what percentage of types accredit help or hurt you but they don’t get into the nuts and bolts of it all. There are however some basic rules of thumb. One rule of thumb is to have your balance be lower then half the highest available balance. So if your highest available balance on a visa card is say 10k. Make sure your actual balance is below 5k. There is also a seasoning factor. Someone who has maintained good credit standings for a long period of time will generally have a higher score then someone who just established their credit.

Whether you pay all your bills on time is probably one of the more important aspects that determines your credit scores. Most companies that extend credits to you report to the major credit repositories on a regular basis. Any late payments history will have a negative effect on the credit scores. The more recent the reported “lates”, the higher the impact on scores. Lender banks consider mortgage payment “lates” much more severe than credit card late payments, and punish homeowners with mortgage “lates” accordingly with higher interest rates and/or lower loan amounts.

Your credit report will list any collection or charged-off accounts that you may have. Having these kind of accounts reporting will definitely have an adverse affect on your credit score. A word of caution though. Paying off collection accounts, especially older ones may cause your credit score to go down, at least in the very short term. If you are applying for a mortgage please consult with a mortgage professional such as myself before paying old collection accounts.

The number of recent inquires has an affect on your score as well. Although it does not carry as much leverage as many other factors in determining your credit score you should still avoid having your credit checked unless necessary.

If you have had a bankruptcy, you can expect it to stay on your credit report for up to 7 full years. Although it will still show, there are ways to still increase your credit score after a bankruptcy.

A type of mortgage lending intended to serve borrowers who do not qualify for prime loans because of credit problems or a limited credit history.

Subprime loans that are over 80% typically don’t require Mortgage Insurance. The risk of default is already calculated in the rate.

Subprime loans are a great tool to get credit challenged borrowers into a home quickly without taking the time to clear up past credit issues. When going into a subprime loan it is often advised to opt for a 2/28 or 3/27 vs. a 30 year fixed. A 2/28 or 3/27 loan is fixed for the first 2 to 3 years then becomes an adjustable rate thereafter and offers a lower rate than the 30 year fixed. This 2 to 3 year time period gives you the time to better your situation enabling you to qualify for a conforming loan with lower rates before the rate becomes adjustable.

What’s in a name? A new term making its way in the mortgage industry in response to the term sub-prime. That new term is non-prime. Some lenders believe that calling a loan category “sub” is demeaning and turns off prospective credit challenged borrowers. The term non-prime suggests a less derogatory connotation and may be more viable as a marketing term.

If you do need to borrow over 80% over your home’s value, let us know and we will compare your total monthly payments with PMI on a prime or Alt-A program and without private mortgage insurance on a low rate subprime program for people with fair credit.

Subprime lenders are great for getting first time home buyers, with or without good credit, into a home. Subprime lenders also help borrowers with excellent credit that have other problems getting financed like, proving income, loan to value etc.

These are mortgages offered that allow for credit problems, higher loan to values, higher cash out amounts, no PMI insurance. They also have looser underwriting guidelines, ignoring charge offs, judgments and collections. Also underwriting turn around times can be much faster. Sub-prime mortgages were designed for those people who don’t fit into the small box that conventional underwriting allows for. With a Sub-prime mortgage you can secure a loan with credit scores as low as 500. Obtain no income verification loans with scores as low as 600. In many cases you can combine your first and second mortgage, secure a lower rate, avoid private mortgage insurance and save hundreds of dollars per month.

Mortgage brokers are usually the only source for subprime loans, as these loans are almost never offered by neighborhood banks. Most mortgage brokers have a network of mortgage banks that offer loan programs for all sorts of unconventional situations.

These types of loans are available to help borrowers with past credit history obtain mortgage financing. They are usually put in an ARM loan, fixed for a couple years so they can begin with a lower rate. This gives them time to work on their credit and ultimately refinance into a loan with better terms

Subprime lending refers to the extension of credit to persons who are considered to be higher-risk borrowers. In lending parlance, their credit ratings are “B” or “C” rather than “A” or “A-”. Lenders typically price subprime loans to borrowers at rates of interest and points and fees slightly higher than conventional loans.

Lenders feel that people who have not handled credit well in the past are at a greater risk of failing to repay their loans. Standard-priced loans are typically made to people with good credit history because their past record proves to lenders that they are at low risk of default.

Subprime lending offers many choices today. You can now get a home loan with credit scores in the 400’s, have late payments, bankruptcies, foreclosures, but all will reflect the interest rate that you will receive.

Subprime lenders are a huge asset to the population of people wanting to purchase homes that don’t fall under normal underwriting guidelines. Many people would not be able to purchase their dream home without Brokers providing these types of loans consequently causing less sales in the market place and a slower economy. Fill out the online form today and get started on your home search.

Loans to borrowers whose credit is less than perfect will almost always be subprime loans. There are also other circumstances that lead to subprime loans, including high outstanding debt, unproven income, etc. Even borrowers with good credit may receive subprime loans for a variety of reason, including lack of verifiable rental history or liquid cash reserve requirements.

One solution if you have a low credit score is to purchase the home with a sub-prime lender and then clean up your credit score. Once the bad credit score is improved then refinance the home with a lower rate.

Especially when borrowing more than 80% of the value of your home, the slightly higher rates which lenders charge borrowers who have less than perfect credit are more than made up for by the savings the borrower receives by not having to pay for Private Mortgage Insurance which would have been required of a borrower with perfect credit.

Do you feel you are a subprime borrower? I can understand how this can be intimidating and I want to thank you for reading the information above. If you would like to continue this conversation than please contact me so you and I can discuss your financial situation. Please read more valuable information and when you feel comfortable I would like you to contact me.

First time home buyers may opt for subprime loans when they have little savings. Typically the asset requirements for subprime loans are not as strict as prime loans.

Common subprime candidate could possibly be Bankruptcy, Foreclosure, or major Credit Card Debt. Consult a Mortgage Professional so they help you obtain a home with little money down even carrying these difficult charges against your personal history.

Subprime is not for just poor credit borrowers. Any time you go over 80% loan to value, you get non prime rates.

The key to getting a sub-prime loan is disclosure. Although you may have been turned down by a bank for a certain incident in your credit history you need to be honest with your mortgage broker and disclose all the possible occurrences in your credit history that may prevent your loan from closing. Mortgage Brokers are experts in finding the right lender to fit your needs. If anything has been omitted the lender will find it and wonder why a broker did not submit the information. Lenders do not like surprises. So, disclose everything, good or bad, from your credit history and let the Mortgage Broker find the right lender for you.

As a rule, lenders offer subprime rates to customers who have credit scores below 620. If your score is higher than that, you should be able to qualify for a better interest rate. If not, you can either accept the higher rates from lenders, or take time to improve your score by paying off some bills or resolve previous collections and charge off’s in a timely manner.

Everyone wants to qualify for loans at the lowest interest rates and with the most favorable conditions, but for those with severely blemished credit reports, the odds of doing so may not be attainable, but there may still be programs available.

Editors Note: Due to the mortgage and credit crunch, loans for second homes and vacation homes are available but qualifying has become more difficult. If you’re in need of one of these mortgages in Denver contact us to discuss your mortgage options.

2005 was one of the hottest years on record for people buying second homes with over 21% of all purchases being second homes. Driving this trend is the availability of capital for baby boomers from harvesting the swelling equity from primary residences as home values soared over the last few years. Some areas like Destin, Florida averaged over 25% appreciation in 2005 alone. Hot areas are, as suspected, homes near the beach, like the Destin area, mountains and other recreation areas. According to the National Association of Realtors, for markets where over 10% of the homes are seasonal, there was a 59% increase in value from 2001 to 2004.Also helping in the growth is the publicity given to the real estate investment industry with infomercials like Carlton Sheets focusing on the low down payments required. In some cases 5% or less is all that is required to get you interest rates that rival those for primary residences. Lastly the popularity of low payment loans like the interest only and cash flow option arm have joined the low down payment programs so that the homes are cheaper to get into and cheaper to hold, at least on the short term. Also helping in the growth is the publicity given to the real estate investment industry with infomercials like Carlton Sheets focusing on the low down payments required. In some cases 5% or less is all that is required to get you an interest rates that rival those for primary residences. Lastly the popularity of low payment loans like the interest only and cash flow option arm have joined the low down payment programs so that the homes are cheaper to get into and cheaper to hold, at least on the short term.

To be considered a 2nd home you are not allowed to own more than two second/vacation properties. Any more than two second/vacation properties and you may have to consider it an investment property.

Often the lender will lend a lower LTV on a second home vs. a primary residence.

You may be asking yourself why real estate is such a good investment. Let’s look and see why it is such a good investment. You average home’s appreciation rate is around 5% per year. The numbers look like this: Year 1 - 100,000 home value when you buy Year 2 - 105,000Year 3 - 110,250Year 4 - 115,762Year 5 = 121,550As you can see it doesn’t take long to build up some equity in your house. If you bought a 200K home then those numbers would be double. This example is not even taking in into account that you are paying down the principle balance on your loan. If you have your home on an interest only or pay option loan then you are probably cash flowing each and every month too.

Option ARMs are excellent tools for investors seeking rental income, particularly on seasonal properties. You have the option to keep your payments low when the property is empty, and manage your cash flow while the property is booked or rented.

Keep in mind that if it is a second home or investment property, there may be loan to value restrictions.

Some of the factors that lenders look at when qualifying a home as a “second home” are:1. Distance from primary residence2. Location3. Is the home being used for “personal” use

The first step for obtaining a second home is to speak with your mortgage broker and discuss financing options and determine the amount of money you can affords to spend. Be sure to remember the added maintenance costs of a second home, a lot of routine work needs to be done to maintain it and keep it in enjoyable condition. This may be work that you may not be able to do yourself do to distance or time limitations.

If the property that you are buying is for the purpose of a legitimate vacation or second home, many lenders offer loan terms that are comparable to those offered on a primary residence. To qualify, the lender will need to be comfortable that the property is being used as a second home, not as investment (rental) property.

Lenders offer more favorable terms on second homes than investment properties. Underwriters will want to know for sure if the home is being used as a second home or as an investment property. Most people purchase second homes in resort areas for vacation purposes or near relatives and family members.

Lending banks post more stringent underwriting requirements for second homes and vacation homes, because if the homeowner should suffer a financial crisis, he would almost always first default on the vacation home and try to save the primary residence. In addition to ensuring that the homeowner is able to afford payments for both the primary and the second home, most banks also require higher down payment for the second residence.

A construction loan allows someone to pay for the costs to build a new home. There are a variety of construction loans available, including spec, rehab, owner builder, and custom.

Not long after the completion of your newly constructed home many people will refinance out of their construction loan in order to lower the interest rate and monthly mortgage payment on their home loan. A construction loan does not usually have the most favorable terms and this is why many homeowners will refinance their construction loan to a different mortgage loan program.

Usually you will only pay interest on the money that has been disbursed to date. Often this is an interest only payment. This allows you to keep your payments low during construction. You may also have the option of deferring the payments until after construction is finished. At that point you can refinance, and roll your payments into the final loan.

Construction loans are usually at higher interest rates, and they will usually require a much larger cash reserve(on hand cash in checking, savings, retirement) in the borrowers deposit accounts.

If the home you are building will be a 2nd home, you may be able place a lien against the equity in your existing home if you do not want to put any cash down.

If you already own the land that you plan to build on, it can be used to decrease your loan to value (LTV). In a sense it can act as a down payment for your construction loan. You will need to know the approximate value of the land to know if the lower LTV is enough for your new construction loan.

A construction-permanent loan is a construction loan that automatically converts into a permanent loan after the construction period is over. The benefit to this type of loan is that you don’t need to refinance after the construction is finished. This also saves you form having to pay closing costs again.

Editors Note: Due to the mortgage and credit crunch, investment property loans may be harder to obtain. If you’re in need of a Denver, Colorado Mortgage contact us to discuss your mortgage options.

Acquiring investment properties has become much more simplified in regards to the financing options available. Today’s mortgage programs can allow you up to 100% financing of your investment property. There are several different loan options available that are set up to maximize your cash flow.

Loans for investment properties are generally much more risky than owner occupied homes. To offset this risk the lender may require a higher down payment and a slightly higher interest rate. Also, if the investment property will be income producing then the lender will restrict how much of this income can be used towards loan qualification. Ask your preferred mortgage professional about the implications of buying an investment property with a mortgage.

Investment loans are so flexible they are allowing many investors to get into the game. It is a good idea to speak to your Mortgage Broker to see how we can get you an investment loan also!

The flexibility of a pay option ARM is also a useful tool to investment property owners. Several of my borrowers us this loan not to increase cash flow, but to maximize the use of the rental income. While the property is rented they make the highest payment they can with just the rent, when the property is vacant between renters they utilize the minimum payment so there out of pocket expense is minimized. Investment property owners can also utilize the minimum payments if repairs are needed, etc. The minimum payment can off set the out of pocket expense of repairs and maintenance

Although it may seem like easy money, making money in real estate investing is a skill that takes research and experience to acquire. It requires a good plan and an understanding of the processes involved to either rehab a home or renting to tenants. Make sure you do your research and understand what you are undertaking. The last thing you want to do is put yourself into a situation where the property you buy costs you money every month.

In the world of real estate investing, a property that generates monthly cash inflow is always considered a sound investment. To create a positive cash flow situation, investors often prefer “interest only” mortgage products, which requires the homeowner to make monthly payments on only the interest accrued for the prior month. Because “interest only” payments are always lower than fully amortized payments, investors have a better chance of creating a monthly cash inflow.

If you are purchasing a home that is in a state of disrepair, you may want to look at a renovation or rehabilitation loan. Lenders will loan on investment properties up to 90% of the after repaired value. Monies are given out on a draw schedule similar to a construction loan. Investors find these types of loans favorable due to not having to pay for repairs and remodeling out of pocket.

A Pay Option ARM and an interest only loan are great choices for mortgages on your investment properties. These will allow you to have the lowest payments possible to help you utilize your cash flow to its fullest potential. There are many more loan programs now for investment properties than there were a while back. You will generally pay a somewhat higher rate on an investment property than you would on an owner occupied property due to the higher risk involved to the lender.

In order to understand how Mortgage Brokers get paid, first one should know WHY Mortgage Brokers get paid. Mortgage Brokers are intermediaries that work with lenders to obtain financing for borrowers who wish to purchase residential or commercial real estate. The reason an individual or organization would obtain the services of a Mortgage Broker would be to secure financing at the lowest rate that the market will offer at that particular time for the type of property they wish to purchase.

Brokers are sometimes paid by both the lenders who underwrite the mortgages and the consumers who get them, and it’s important to look at the documents to make sure the broker isn’t getting paid too much or double-charging you.

Just like a bank loan officer, a broker gets paid for performing all of the work necessary to originate, process, and close a loan, and for the expertise they provide in matching the client and their needs to the right lender and program. These days there are hundreds of lenders with thousands of loan programs. Many customers ask us why they should use a broker, rather than going directly to a bank, and the reasons are simple.* First, a bank loan officer represents the bank, not you. Their job is to originate loans for the bank, and only for the bank employing them. A broker represents you. While they work with banks, you are their customer, and they will represent you when interacting with any and all of their bank relationships.* Second, since the loan officer represents only one bank, they can offer you only the products of that bank, whereas a broker generally represents anywhere from 10 to several hundreds lenders. The broker has far more options to find the best product and the best price for your specific needs, and if for some reason they do not have the ideal fit, they can work with hundreds of additional lenders to find the perfect fit.* Third, you may believe that a bank will offer you better rates. Well, that is rarely the case. The bank’s treasury department has a required rate of return (yield) on the loan, called the ‘wholesale rate’. The bank’s retail loan officer must provide the bank with the required yield, and then they must generate enough additional revenue to pay the loan officer, plus the high operating costs necessary to run a retail bank loan division and its many layers of management and support. A broker will have access to that same wholesale rate, but the additional revenue they must generate to cover salaries and operating costs is far less, since brokers do not have the large infrastructures that the bank has. The law requires that brokers disclose the fees they earn, while banks are not required to do so. Brokers originate 50-60% of the mortgage loans in the US because they provide the best service at the best price - when was the last time a bank provided you with both?* Finally, brokers only get paid if they close the loan. Having someone represent you is always better for you when their income is tied to their success in serving you, the customer.

Mortgage Brokers get paid to provide borrowers with financing to purchase or refinance homes. Most Mortgage Brokers only get paid when they close your loan. Mortgage Brokers are usually paid at closing from the borrower or out of loan proceeds. Mortgage Broker fees are usually capped by each state to prevent them from taking advantage of borrowers. Mortgage Brokers fees can be found on the Good Faith Estimate which are required by law to be shown to borrower within 3 days of applying for a home loan.

A combination of payments by origination fee paid by the borrower and a premium paid to the broker by the bank does not necessarily denote excess charging. In many cases that is the proper way to price a loan in order to structure the loan’s rate and fees to provide the most benefit to the borrower’s situation.

If you use a mortgage broker, you usually pay a fee for services or you pay additional money to your lender (sometimes the extra money is tacked on as an additional point on the mortgage) and then the lender pays the mortgage broker

In many instances Mortgage Brokers are paid by both the borrower and the Lender. This ensures that the borrower receives a favorable rate, while the Mortgage Broker is able to receive adequate compensation. The best method of payment will depend on your individual situation.

So why wouldn’t a borrower go directly to a bank for mortgage financing? The reason is because a Mortgage Broker is able to obtain the same financing at Wholesale Interest Rates, while a consumer will only be able to obtain financing at Retail Interest Rates. As is the case in any industry, Wholesale is always less expensive than retail. For this service, Mortgage Brokers are paid a fee, either directly from the borrower for obtaining favorable rates, by the Lender for obtaining a client that they otherwise would not have obtained, or a combination of the two.

One way a Mortgage Broker can obtain their fee is through charging a fee called an Origination Fee. This fee is paid to the Mortgage Broker for Originating the Loan. The Origination fee is added to the other closing costs that must be paid by the borrower. These fees can be paid out of pocket by the borrower, or in the case of a refinance, or 100% financing loan, the fees can be rolled into the loan. The amount of the Origination fee that is charged is generally a percentage of the loan amount. The amount of the fee is based on the difficulty level of the loan. For this reason a subprime loan will generally carry a higher Origination fee than a conforming loan.

Another reason Mortgage Brokers are paid for their services is because very often, they are able to obtain financing for individuals that would not have been offered by any traditional bank. Borrowers who have poor credit, little to no money for a down payment, an unusual property type, or a multitude of other issues will always find it easier to obtain financing through a Mortgage Broker.

Mortgage Brokers can also be paid by the Lender that actually makes the loan. The Lender compensates the broker for bringing clients to obtain loans. This fee is referred to as “Yield Spread Premium”, and the amount generally depends on the interest rate at which the loan is made to the borrower. The higher the interest rate with respect to current market conditions, the higher the Yield Spread Premium paid to the Mortgage Broker. This method of payment is utilized by many brokers because it reduces the out of pocket fees to the borrower while still allowing the broker to obtain compensation for their services.

Although everyone enjoys getting a “good deal”, it is prudent to be suspicious of a mortgage broker who charges significantly less than the norm. A good mortgage broker is a trained, experienced professional who must be properly compensated for his/her services. Look at it this way. Would you feel good about being operated on by a doctor who works for way less money than other doctors? As in just about everything else in life, paying too little often means a drop off in the quality of the goods or the service.

The bottom line is the mortgage broker gets paid for a tremendous amount of work having to coordinate the lender (closing coordinator ampersand funder), title company (closer ampersand assistant), Appraiser ampersand Insurance company. In most cases this is an arduous task to get each of these people to work in synergy. This demands a great deal of time and effort. In addition mortgage brokers find the best lender for your situation and every lender has different guidelines to follow for underwriting conditions. This is a fluid industry and guidelines for lenders change on a constant basis. This makes the tasks of a mortgage broker more challenging.

Editors Note: Due to the mortgage and credit crunch, Low Down Payment Mortgage Programs may no longer be available. If you’re in need of a Denver Colorado Mortgage contact us to discuss your mortgage options.

Here’s no question about it: Buying a first home is a big financial commitment. In most cases, a home is the largest single purchase an individual or family will make in a lifetime. However, because of the tax advantages afforded to homeowners, buying a home also can be one of the best financial decisions you’ll ever make. Problem is, many would-be homeowners remain renters simply because they mistakenly believe mortgage lenders require that buyers come up with 20 percent of the purchase price as a down payment. While it’s true lenders feel it’s less risky to work with buyers who are able to bring a substantial down payment to the table, the standard 20 percent requirement is fast becoming a relic of the past. In recent years, lenders have become more flexible in working with first-time homebuyers by creating a variety of special programs that require only a small down payment. These programs, combined with the most favorable interest rates in two decades, have encouraged growing numbers of renters to consider the tremendous benefits of home ownership.

Private Mortgage Insurance: Most major lenders offer privately insured mortgages, which generally require a 10 percent down payment (although some lenders offer loans with a 5 percent down payment to buyers with exceptional credit). These loans typically are not limited by maximum loan amount or purchase price limitation.

While the list of programs offered by individual lenders is too extensive to mention in detail, here are some common programs you are likely to come across as you work with your real estate agent to purchase your first home: Federal Housing Administration (FHA): FHS mortgages allow homebuyers to purchase a home with as little as a 5 percent down payment, and to finance all non-recurring closing costs. The current maximum loan amount in most urban markets is $151,725. In addition, borrowers are allowed to use up to 41 percent of their gross income toward paying mortgage debt – well above the ratio allowed under most private programs.

Mortgage Revenue Bonds and Mortgage Credit Certificates: Mortgages funded with these instruments typically require a minimum of 5 percent down and have interest rates that are 1.5 to 2 percentage points below conventional 30-year fixed rates. These types of loans, offered by state and local housing agencies, are available only to first-time homebuyers. There generally are income and purchase price caps that vary, depending on where you plan to buy.

Department of Veterans Affairs (VA): VA mortgages allow veteran or active service personnel purchase home with no down payment, up to the current maximum price of $184.000. However, there is no purchase price limitation for buyers able to make a down payment. Like the FHA program, VA borrowers can put up to 41 percent of gross income toward their mortgage debt.

Clearly, there are a lot of options for first-time homebuyers. While lenders will be more than happy to share information about their own programs, you can save yourself a good deal of time by first selecting a professional loan officer who is experienced in working with first-time buyers in the areas where you plan to buy. An agent who focuses on first-time buyers will know from experience which lenders in your area offer a low down payment program that will meet your unique needs. Today, taking the first step toward owning your own home is easier than before. Your real estate agent is your best resource for finding innovative ways to help you come up with a down payment and qualify for financing. There’s certainly no need to wait until you’ve saved a 20 percent down payment!

Piggyback mortgage strategies incorporating up to 80% first mortgage and up to an additional 45% in the form of a second mortgage or equity line of credit can allow borrowers with all types of credit to own a home with no money down.

In the case of many of today’s lenders, there may not be any down payment required. Lenders are constantly looking at making more and more programs available to people looking to purchase a new home. Lenders are willing to do 100% loans, with a credit score of 560 or better. This may not be the best option, that is why it is best to know that there are several low down payment programs, that may also be available to you.

In addition there are down payment assistance programs that can help with thousands of dollars for down payment and closing cost. Most cities have grant programs available that don’t have to be paid back.

Community Homebuyer Program: Through their networks of mortgage lenders, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) offer Community Homebuyer Program loans. These programs require a 5 percent down payment, 3 percent of which may be a gift. To further help buyers qualify, applicants may use 38 percent of their gross income. Currently, the maximum loan amount available through these programs is $203,150.

Flat fee mortgages typically only cover the lenders costs such as processing fees, underwriting fees, tax service fees (used to set up an escrow account) and credit report costs.

You will still incur normal title charges, reserves, pre-paids and possibly other charges on these types of loans.

Not all people offering flat fees are telling you the whole story. Flat fee mortgages are almost as expensive in general as no closing cost mortgages in terms of higher interest rates, more debt, and unfavorable terms.

Of course if you choose to go the flat fee mortgage route, the interest rate is likely to be a bit higher than a normal mortgage where you pay these fees upfront. The higher interest rate will help offset these fees.

Always have your broker compare a “FLAT FEE” mortgage, and a mortgage with a lower interest rate and higher fees. Most times you will find that your up front costs will save you money in the long run with a lower interest rate. You want to look at the long term and find out which loan makes the most financial sense.

Knowing how long you want to keep a mortgage is key in making a decision on how you want to pay your fees. The longer that you expect to keep a mortgage, the lower you will want your interest rate to be. Your savings will be increased for every month that you keep a mortgage with a lower interest rate than a different one.

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