Buyer Tips & StrategiesFirst Time Home BuyerHome OwnershipMortgage Lending February 15, 2024

Date the rate, marry the house: there’s a perfect match out there for everyone!

During this time of year, you may hear that sentiment more and more. But the truth is, your perfect match depends on where you are in your personal journey. What may have been a great fit a few years ago wouldn’t work for you now. And who knows what will be right for you in a few more years?

We’re talking about different types of mortgages, obviously.

What, did you think we were talking about dating? Of course not—though we do have some thoughts about “dating the rate, marrying the house” you can read all about.

Guaranteed Rate Affinity offers dozens of different types of loans that can help you afford buying a home. You can talk to my loan officer today about your options, or read on to find out more about finding the perfect loan match for you. Or you can get the mortgage process started with an online application.

FHA home loan: The young professional
Since they are insured by the Federal Housing Administration and administered by specially approved lenders, FHA loans are typically easier to qualify for than conventional mortgages and offer low down payment options. That makes them a great match for first-time homebuyers who may not have had much time and income to save for a hefty down payment.

For those with credit scores of 620 and above, the down payment options for an FHA loan start at 3.5%., while credit scores below 620 require down payment options to start at 10%. And FHA loans do require the borrower to pay MIP (Mortgage Insurance Premiums) annually over the course of the loan, which can inflate your monthly payment.

A temporary buydown: getting set up with a match
A temporary buydown gives you the peace of mind that comes along with a fixed-rate mortgage, while also keeping your payments low for the first year or two of your loan. In order to get a temporary buydown, you’ll need to work with your home’s seller to find the mortgage match you’re looking for. Almost like getting set up on a date.

A temporary buydown reduces the interest rate on your mortgage for the first year or two of your loan. The seller is required to contribute to your loan to lower the rate during the initial period, and then payments go back up after that initial period is over.

Guaranteed Rate Affinity’s temporary buydown program is called RateReduce*** and they offer five different RateReduce programs to help you ease into your new home and mortgage payment as you build equity and get acclimated to your new monthly mortgage payment.

VA home loan: Your match looks good in uniform.
Available to active or retired members of the U.S. military and certain qualifying relatives, VA loans offer some of the same benefits as FHA home loans, such as more lenient credit requirements and looser rules surrounding DTI.

They also offer an additional, and huge, benefit: no down payment is required. While VA borrowers can opt to pay a down payment, about 90% of VA home loans customers put down no money at all when they take out their loans.

USDA home loan: The outdoorsy type
Like FHA and VA home loan programs, USDA loans aim to help make homeownership more affordable for more Americans. Guaranteed by the United States Department of Agriculture, USDA loans are for homes located in one of the USDA’s qualifying rural areas and have income limits—generally your household income can be no higher than 115% of the median income for the area.

ARM loan: Mr. or Ms. Right Now
Adjustable Rate Mortgages (ARMs) are a unique type of home loan, in that they feature an interest rate that changes after a fixed amount of time. Simply stated, an adjustable rate mortgage is a mortgage that consists of two distinct elements:

1. An initial fixed rate period (typically 5-, 7- or 10-year options) that features a low introductory rate.
2. A variable rate period for the remainder of the loan that will fluctuate based on the market (and can go up).

Because of their lower monthly payments for the first period of the loan, ARMs are particularly attractive to first-time homebuyers and buyers who don’t think they’ll stay in the home for more than the initial period of the loan.

FirstHome+: The sweetheart deal
FirstHome+ is a program that eliminates some loan terms and upfront fees for households that are at or below 100% Area Media Income (AMI) in many areas of the United States, and up to 120% AMI in high-cost areas. For instance, the AMI for the Chicago area is $105,700. So, a household could make up to $126,840 (120% of AMI) and still qualify for this program.

That means some first-time homebuyers could qualify for premium pricing as much as 2% lower with this program than they would otherwise, depending on their qualifications.*

AMI is a measure of the average household income in a given area. It’s one way the U.S. Department of Housing and Urban Development (HUD) can determine if a borrower can apply to some federal housing programs. This is our way of leveling the playing field for first-time homebuyers and those from mid-to-low-income communities.

You’ll need to ask a Guaranteed Rate Affinity loan officer if you qualify for this loan program. Sometimes, if only one borrower is a first-time homebuyer, you can still qualify.

Make local mortgage matches

Many loan programs are offered by state or local governments or are specific to certain parts of the country. That’s why it’s so important to work with a local expert, who can find all the down payment assistance and special loan programs that are only available in your area. Here are a few examples of the many types of local programs you could match up with:

HomeReady SPCP
If you’ve started looking for a home, one of the biggest concerns is having enough for a down payment. Our HomeReady Special Purpose Credit Program (SPCP)** aims to take those worries off the table. The program provides up to $8,000 in closing costs and down payment assistance to qualifying buyers. Guaranteed Rate Affinity is one of the few mortgage lenders to offer this program.

Currently, this program is not available in all areas, though that could change in the future. Right now, there are eligible census tracts in the following cities: Currently, this program is not available in all areas, though that could change in the future. Right now, there are eligible census tracts in the following cities:

Dallas-Fort Worth-Arlington
Houston-Pasadena-The Woodlands
Miami-Fort Lauderdale-West Palm Beach
New York-Newark-Jersey City
Oklahoma City
Riverside-San Bernardino-Ontario
San Antonio-New Braunfels
St. Louis
Tampa-St. Petersburg, Clearwater

Ask a loan officer if you live in one of these census tracts and can qualify for this loan program. You don’t need to purchase in one of the tracts, either. You can buy anywhere.

Down payment assistance programs
A down payment can be a hurdle for many first-time buyers. There are instances where buyers are ultimately paying the same amount in rent as their monthly mortgage would cost, but just don’t have a large enough down payment to make buying a possibility.

First-time homebuyers could be eligible for one of many down payment assistance programs that could help give you a boost. From state to federal programs to neighborhood- to occupation-specific options, both government agencies and private organizations have programs worth investigating.

Consider community lending
Community lending programs create alternatives for buyers who don’t necessarily meet the industry-standard, traditional mortgage qualifications. With more flexible guidelines, someone who might not have otherwise been approved for a mortgage could find the financing they need to become a homeowner through a community lending option.

We’re also seeing more of these programs not limiting requirements to income but looking at lending areas that may be underserved as a whole. It’s worth inquiring whether the neighborhood you’re looking to buy in would fall under this category. Your loan officer will be able to find that information out for you.

Make an undeniable first impression
Now that you’ve met all the suitors, the best way to get better acquainted and find your true love is to speak with one of our experienced loan officers. They can help match you with a loan perfectly suited to your unique needs—which puts you one step closer to a happy ending to your homebuying story.

At Guaranteed Rate Affinity, they want to give you every possible advantage to land your dream home. Apply using PowerBid Approval and show sellers and agents that you’re serious about getting your new home.

Our process enables homebuyers to enter bidding wars against deep-pocketed cash buyers with confidence when working with a Guaranteed Rate Affinity loan officer.

*At least one borrower must be a first-time homebuyer with total qualifying income 100% or less of the MSA where the property is located and 120% or less if the property is located in a high balance county. Must be <100% of the AMI for non-high-cost areas and <120% of the AMI for high-cost areas (defined as areas where loan limits exceed standard conforming loan limits). Must meet income threshold based on the Metropolitan Statistical Area (MSA). Talk to your loan officer to find out if you qualify for the rate reduction. **At least one borrower must be a first-time homebuyer, live in an eligible Metropolitan Statistical Area (MSA) and meet product eligibility requirements to qualify. Talk to a loan officer to find out if you qualify for this program. ***Rate Reduce available from participating builders and sellers on select properties. The 1.5/.5 buydown option is not available for VA loans. Guaranteed Rate Affinity is a private corporation organized under the laws of the State of Delaware. It has no affiliation with the US Department of Housing and Urban Development, the US Department of Veterans Affairs, the Nevada Department of Veterans Services, the US Department of Agriculture, or any other government agency. No compensation can be received for advising or assisting another person with a matter relating to veterans’ benefits except as authorized under Title 38 of the United States Code. Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply. Savings, if any, vary based on the consumer’s credit profile, interest rate availability, and other factors. Contact Guaranteed Rate Affinity for current rates. Restrictions apply.

Original post By Craig Wales