Coming Up With a Down Payment on Your Home in Maryland
Coming up with a down payment on any house has traditionally been one of the biggest obstacles to buying a new home, and your new house in Maryland is no exception, especially if your income is fixed or not especially high end. However, savvy buyers can take advantage of programs designed to cure the down payment blues without charging high interest rates.
Programs are available for borrowers from a wide range of incomes and places. What these borrowers have in common, whether they are teachers in California or cashiers in Memphis, is trouble saving enough money to make a down payment on a house. The programs make it easier for people with less money to put down – and who may have had a minor credit issue in the past – to qualify for a conventional mortgage. The key is that these are conventional mortgages without the high rates of subprime mortgages.
Until the 1990s, conventional mortgage lenders usually required borrowers to come up with a down payment of at least 20 percent. It was hard to save that much money while paying rent. Now, after years of steadily relaxing lending standards, marginal borrowers routinely get loans for 97 percent or 100 percent of a house’s value, allowing them to buy houses without having to save money for a long time.
The downside of such loans is that they tend to carry higher interest rates. Someone with good credit and the ability to make a 20-percent down payment might get a 30-year loan at the best available rate while someone with the same credit, but who can’t make a down payment, might pay up to 1 percentage point more.
That’s where Fannie Mae and Freddie Mac enter the picture. These government-sponsored enterprises buy mortgages and package them as investments. They want to encourage home ownership so they frequently team with lenders, nonprofits and state and local governments to help people such as yourself who have trouble getting affordable mortgages.
Finding out about these programs can be tricky, especially in states such as Maryland. If you’re a teacher in California, for instance, you probably have received word about mortgages through CalSTRS partners, which are common there. But if you’re moving to Maryland, there may or may not be a program available for you. Ask around. You can start by asking lenders if they offer conventional mortgages with low down payments in conjunction with Fannie Mae, Freddie Mac or nonprofit or government agencies. Fannie Mae allows you to search for its affiliated lenders through its Web site. It’s the first place to look.
Related posts:
