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The Myth of 20% Down


by Jayson Stebbins jstebbins@guildmortgage.net


today. There is simplicity to the business now that I remember from my early days. Gone are many of the exotic and dangerous loans, the adjustable rate has taken a back seat to fixed rates, and guidelines are built around full documentation and full disclo- sure. That does not mean that in order to buy


A


a home you have to have 20% down. I spoke to a potential buyer who expressed frustration about missing this window of opportunity because they hadn’t saved up enough to put down 20%. The myth of 20% down can be busted by many loan programs out there today. Remember that if you choose to put


down less than 20%, you are entering into a loan that could have mortgage insurance requirements. This additional component of the payment is important to consider for qualifying purposes, and has rates that vary by program. Conventional, conforming loans still


allow for down payments as low as 5%. These are loans backed by Fannie Mae or Freddie Mac, and are the most common loans out there today. For first time buyers, you may even qualify for as little as 3% down. Mortgage insurance is required and


s I approach my twentieth year in the Mortgage Business, I see simi- larities between when I started and


provided by third party vendors. Loans backed by the Federal Housing


Administration, or FHA, have a 3.5% mini- mum down payment requirement. Contrary to popular belief, you do not have to be a first time buyer to access FHA financing. Mortgage insurance is self insured on this loan program, meaning FHA provides it as part of the loan. It is a more expensive alternative than conven- tional, but allows for expanded qualifying ratios and is more lenient on credit scores. Did you know that the US Department


of Agriculture does loans? Did you know they offer 100% financing? They do, but it is limited to certain counties and cities, and there are income limitations for those using the USDA loan program. If you are in San Benito or Monterey County this is a great loan for the first time buyer. Investors who


are buying property will usually still be required to put down at least 20%. The myth of


20% down should not keep anyone from exploring their options in


today’s market of record low rates and ten year low property values.


Jayson Stebbins is a nineteen year veteran of


the Mortgage Banking industry and an Accredited Mortgage Professional through the Mortgage Bankers Association. He grew up in Morgan Hill and currently lives in Gilroy. He is the local Branch Manager of Guild Mortgage, a fifty two year old Mortgage Banking firm. His office is in Morgan Hill and serves all of Santa Clara, San Benito, and Monterey counties. You can reach Jayson and his Team at 408-782-8800 or at jsteb- bins@guildmortgage.net.


14 April 2012 • Out & About


www.outandaboutmagazine.com


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