What I like about talking to a mortgage specialist is that now they say things like, “Without a down payment, there’s nothing to discuss” and “If your credit score is under 640, we’ll have to end this conversation.” I don’t know how serious they are about it, but at least they now show a willingness to be more serious.
3 responses to “The Good Part”
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There is still FHA first time home buyer program, I believe, if you have no down payment or too small a down payment. Credit rating below 640 I am pretty sure would make it impossible.
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For no down payment or very low down payment you would have to have a pretty solid credit score and you’d get a pretty unfavorable rate anyway. Ideally, you’d put 20% down but I don’t know anyone who’s recently bought a house where I am and who was able to do that. I bought the house in year 2 after grad school, basically all the downpayment was from savings in the 1.5 yrs of actually having a real salary as opposed to the $20K in grad school. We put 3% down, which is very low, but putting down more would require waiting more time to save and paying rent and we decided against it. We were able to refinance a few years later to a better APR and a 15 yr loan with essentially the same monthly payment.
They probably told you that, with less than 20% down, you are facing paying PMI (private mortgage insurance). That’s money you essentially throw away (it’s paying for the lender’s risk to loan you money with a low down payment.) Look for loans with lender-paid PMI, which means that the lender pays PMI and they transfer it to you through a higher interest rate; the benefit is that this way you pay it as interest (as opposed to just money you throw in the void) and then you can get a tax deduction.LikeLike
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This is a very helpful comment. Thank you, my dear friend!
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A conservative literary critic and college professor
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