NEW YORK – June 16, 2017 – Buyers may soon be able to bring less to closing. They were blamed for precipitating the housing crisis years ago, but major lenders are giving no- and low-downpayment loans another shot.
Several major lenders are reportedly offering loans with just 1 percent down. Navy Federal, the nation's largest credit union, offers its members zero-down mortgages in amounts up to $1 million. NASA Federal Credit Union markets zero-down mortgages as well.
Quicken Loans, the third highest volume lender, offers 1 percent downpayment options, as does United Wholesale Mortgage. And the Department of Veterans Affairs has offered zero-down loans to eligible borrowers for many years.
Also, Movement Mortgage, a large national lender, has introduced a financing option that provides eligible first-time buyers with a non-repayable grant of up to 3 percent. As such, applicants can qualify for a 97 percent loan-to-value ratio conventional mortgage, which is basically zero from the buyers and 3 percent from Movement. For example, on a $300,000 home purchase, a borrower could invest zero personal funds with Movement providing $9,000 down. The loan also allows sellers to contribute toward the buyer's closing costs.
So far, the delinquency rates on these low- to zero-down payment loans have been minimal, according to lenders. Quicken Loans says its 1 percent down loans have a delinquency rate of less than one-quarter of 1 percent. United Wholesale Mortgages told The Washington Post that it has had zero delinquencies from the borrowers on its 1-percent down loan since debuting it last summer.
For Movement's new loan product, the lender will originate the loans and then sell them to Fannie Mae, which remains under federal conservatorship. Fannie officials released the following a statement:
"(We're) committed to working with our customers to increase affordable, sustainable lending to creditworthy borrowers. We continue to work with a number of lenders to launch (test programs) that require 97 percent loan-to-value ratios for all loans we acquire." They add that there "is no commitment beyond the pilots," which are "focused on reaching more low- to-moderate income borrowers through responsible yet creative solutions."
During the housing crisis, zero-down loans were among the biggest losses for lenders, investors and borrowers. However, housing experts say the latest versions are different from years ago. Applicants must now demonstrate an ability to repay what's owed. They also must have stellar credit histories and scores, and lenders require a lot more documentation to prove borrowers are in good standing.
Also, many of the programs are charging higher interest rates. For example, Movement's rate for its zero-down payment option in mid-June was 4.5 percent to 4.625 percent, compared with 4 percent for its standard fixed-rate mortgages.
Some critics say that the borrowers who really could benefit from such options aren't able to qualify for them. Paul Skeens, president of Colonial Mortgage Corp. in Waldorf, Md., told The Washington Post that "it seems like people without excellent credit scores and three months of [bank] reserves don't qualify."
Source: "No Down Payment? No Problem, Say Lenders Eager to Finance Home Purchases," The Washington Post (June 14, 2017)
Real Estate Empire Group is a fast growing boutique Real Estate firm that was established in 2001. It began to revolutionize property sales as well as marketing through brokers, agents, and an administrative team. Our highly trained administration team ensures the best service possible as well as helps manage transactions efficiently across a spectrum of properties, prices and sales including international transactions. Our office provides agents an opportunity to grow with market- leading training and unique tools devoted for growth and expansion. We are based in Doral, FL placing us at the center of Miami’s fast-growing International market. Our wide- ranging model combines various technologies; efficient support system and leadership initiatives that help agents govern sales in a superior form while gaining a threshold as a Real Estate agent. We at Real Estate Empire Group provide to ensure excellence in every aspect of Real Estate.
This information is brought to you byHenry & Laly SanzTeam H&L Miami a
"Client Feedback on Mauricio Restrepo
How fast did your agent respond to your questions: 5 out of 5
How well did your agent use technology: 5 out of 5
How helpful was the support staff: 5 out of 5
How good was the auxiliary services we recommended: 5 out of 5
How did the closing go: 5 out of 5
How close did we meet your expectations: 5 out of 5
How likely are you to recommend us: 5 out of 5
Services used: Buy
How did you find us: Internet Search
Your most memorable moment
The way that he helped me even after the sale......excelent.
The moment you'd rather forget?
do not have one
I will recomend him as a Realtor
Not at this time, but will let you know if I do in the future."