Besides better weather, first time home buyers will have another good reason to celebrate Spring 2015 - the roll out of Fannie Mae's My Community Mortgage program! Available in March 2015, this program was designed by Fannie Mae to provide low rates, minimal risk-based price adjustments, and reduced mortgage insurance costs to qualified. first time home buyers.
There are many reasons why this program is a good fit for first time home buyers, but today we'll address three MAJOR benefits of this program:
Low Rates & Risk-Based-Price Adjustments
The My Community Mortgage program has NO loan-level price adjustments, which are all the reasons you may have to pay more for your loan due to being "bad risk" for the lender. These LLPA's can include:
More Affordable PMI (Private Mortgage Insurance)
When a lender orders mortgage insurance for a conventional loan - also known as PMI - the cost is determined by many factors, one of which is the coverage requirements. Because the coverage required with a MCM loan is considerably less, this results in cheaper PMI costs for the buyer. On a 3% loan consumers should expect to pay a little over 1% of the loan as premium.
Reduced Down Payments
The MCM program has reduced down payment requirements, allowing Down Payment Assistance (DPA) to assist in a down payment that can provide as little as zero down on a home purchase. This could be a huge help for those home buyers who may otherwise qualify for a loan, but are unable to come up with a large down payment.
A few last footnotes: Even though the My Community Mortgage is designed to help first time home buyers overcome the high down payment required when purchasing a new home, it is still subject to Fannie Mae's eligibility requirements including underwriting, income documentation and risk management standards. The program also requires that if all buyers are first time home buyers, then ONE buyer must complete and submit a Pre Purchase Home Buyer Education and Counseling Certificate.
To learn more about the My Community Mortgage, visit Fannie Mae My Community Mortgage (MCM), and as always, enlist the help of a qualified and knowledgeable mortgage lender to assist you when considering ANY type of home mortgage loan!