Question : What type of home loan is best for someone with 680 Credit score, no money down?
I'm looking to buy a home. My credit score is 680, but I have no money to put down. What is the best loan option for me? A friend is buying a home and he says his rate is 1% and his mortgage increases by 1% per year. Not his interest rate, but his mortgage payment. That doesn't sound right to me. Any advice?
- asked by The Skizzanator
All Answers:
Answer #1
I don't know where you could get a 1% mortgage,but that's very good if you can. Go and talk to abank or mortgage company. There are many optionsand no one on here could give you a full range ofoptions without knowing much more than you cangive here. It's best if you have a down paymentthough. Happy home shopping!
- answered by capnemo
Answer #2
If you are buying outside a big city try getting arural development loan.
- answered by omgmytoof
Answer #3
your friend does not understan his mortgage andthe negative am. You can do an 80-20, best tocall me though so I can talk to you in person. Free advice, Jim 313-304-4645
- answered by northville
Answer #4
a 680 credit score will qualify you for 100%financing with most companies. Check with yourlocal bank or a mortgage broker. Most likely theywill give you and "80/20" which means you'll have2 loans, one at 80% of the purchase price, theother at 20% of the purchase price. Most often,the seller will concede a portion of the salesprice towards closing costs to help with "no moneydown." However, you still need to come up with anearnest money deposit of $500-$1000 once apurchase agreement is reached.You friend's loan isa "Pay Option ARM." The payment rate is 1%,though the interest rate is higher. Thatparticular loan is not offered at 100%. You'dhave to have at least 5% down to qualify for thatloan.Good Luck!
- answered by Joe L
Answer #5
There are several options for someone with a 680,but the vanilla 30 year fixed rate mortgage isoften the best. A steady payment with nochange.What your friend has is called a pay optionARM. It's an adjustable rate mortgage that allowyou the option to pay the entire payment, interestonly, or below interest only. Paying below theinterest will cause the principal of the loan toincrease, which you will pay interest on. So whilehe's paying less for now, unless he knows whathe's doing, he's going to end up with a loanlarger than the value of the home and more costlythan he can afford. These loans are not forconventional homeowners. They are meant forinvestors or people planning on selling the homesoon. There are the 80/20's that some of thesepeople have been speaking about, but the 20's areHome equity loans, which I try to steer my clientsaway from. I can get you 100% financing without an80/20 or a 90/10, but with PMI that is now taxdeductible and will fall off in a short amount oftime.If you want to discuss mortgage options, sendme an email, or check out our website and fill outan application.Baconshmals@yahoo.comAapexfund.com
- answered by baconshmals
Answer #6
The big question is how much do you make and howmuch do you owe. The mortgage you talk of isnon-sense.
- answered by General Custer
Answer #7
I just bought a house. My middle credit score(the one mortgage companies use) was slightlyhigher than 680, and I got 100 percent financing(no money down) from a local bank at a decentinterest rate.2 things to consider:You have to payprivate mortgage insurance, so your monthlypayments will be a little higher than if you putthe money down, and you won't have any equity inyour house in case you want to take out a homeimprovement loan.
- answered by Kirby
Answer #8
Most likely he has a Rural Development Loan and/orgrant. First time home buyer program. Find a BuyerAgent and have them get you started.
- answered by ogrendle
Answer #9
Either he doesn't understand his mortgage (howlong has he been in it?) or he's on somethingREALLY WEIRD. There are programs for buyers whichstart out at a low interest rate and then it goesup until it reaches the 'norm', usually over 5years. But tehre can be penalties involved if yousell before then.Your credit is fairly strong.Just go to a bank and get prequalified and seewhat rate you get and what you qualify for...andthen go from there. .....
- answered by Amanda H
Answer #10
Actually 100% pay option loans DO exist. There are1 loan 100% with lender paid Mortgage Insuranceand there are the now popular 80/20 with anegam/payoption 1st. You do need good credit toqualify but you can get a first loan at say 7%where you can pay as little as 4% interest onlyand then a 2nd mortgage behind that first. Nowthis means your balance could be higher than thehome is worth but nowadays buyers are gettinghomes WAY below value.I also do not want you tothink 100% should be done as an 80/20. There areMANY lenders that offer 100% one loan with no PMIand it looks like it just became official that PMIis now tax deductible so you may want a 100% loanwith PMI. There are many options with yourscore.Now lets talk closing costs. If you have nomoney to put down, you have the thousands ofdollars required to use towards closing costs? Ifnot, do not worry. In this day and age, sellersare desperate to sell and are willing to paybuyers closing costs, all of them, if they get agood enough offer. Most lenders will limit you toabout 3% of the purchase price but many mortgagebrokers can get you up to 6% seller paid closingcosts. I personally have closed a loan for a buyerthat put down a $5,000 deposit at contract andwalked away with that $5,000 at closing. Wefinanced his entire purchase price plus all of hisclosing costs. Do not be fooled into thinking theseller is actually paying your closing costs anddoing you a big favor, they usually make you raiseyour offer price to include the seller paidclosing costs coming back to you. Just get on thephone with an honest mortgage broker and theyshould help you out. Don’t forget, it is NOTjust about the rate! Check the term of the loan,is it fixed or adjustable, interest only orprincipal and interest. You can email or ask meany questions anytime.
- answered by ScottMortgageExpert
Answer #11
Your friend is in an "option ARM". His payment isbased off of 1%, but his actual rate is probablyaround 7%. That 6% difference in interest isbeing added to his principal balance every month. On a 100K, that's about $500/month that hisbalance goes up. Do you want to put yourself inthat position?
- answered by mortgage help
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