MORTGAGE SHOPPING
Everybody's Uncle,
Would you be kind enough to inform me of mortgage opportunities available that require no or very little down payment for a young (25 years) first time home buyer? I am specifically interested in NYC.
Thank you kindly for your help.
(Unsigned)
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Dear Unsigned,
I can't direct you to any particular lender but arming yourself with product knowledge can help you shop and get a fair deal.
Mortgage shopping is not unlike grocery shopping. Mortgages are commodities not favors, although some lenders try to confuse the issue.
Low down payment mortgages are available but come at a premium. Higher interest rates, inflated creation fees, mortgage insurance, and mountains of confusing issues that require scrutiny.
Before you shop, understand: Annual Percentage Rate (APR), Years of Amortization (repayment), Total Principal and Total Interest. These basics facilitate a grasp of other variables.
Lenders have individual guidelines for loan approval. Loans start to become less feasible and more costly with less then 20% down, worse under 10%; some special programs allow for zero down. Before you pay application fees, gather information. Home buying guides are available. Talkative bank employees might give you free guidance or direct you to Veterans or other financial assistance opportunities.
Be realistic and consider all variables. Above 35-40% of net income for debt payment is higher than I advise but lenders may consider future pay increases for young people with good track records. Family held mortgages work for all parties but have social considerations that must be weighed. Credit record should be established and clean with little or no outstanding debt. Pull your credit report.
Learning mortgage basics is a first step toward financial knowledge that can enrich your life in years to come.
Buy a book, arm your self with knowledge, pound the pavement, and negotiate, negotiate, negotiate.
Everybody's Uncle
