The Low-Down on Moderate Mortgages
If you want to buy a house, mortgages rarely have been so accessible. After a 14-month run-up, interest rates have edged down during the past three months and down payments are at historic lows. Buyers of moderate means can get a house for as little as 3 percent of the purchase price.</br></br>These new ÛÏlow down" loans aren't for everyone. TheyÛªre generally limited to people with middle incomes or who are buying medium-priced homes. TheyÛªre for buyers, not for people who want to refinance. And, in a new development, you will have to buy more mortgage insurance, to cover the risk that you might default. So monthly payments will be a little higher..</br></br>Different lenders offer loans with slightly different twists. But in general, hereÛªs how the middle-income programs shape up: ÐÊ Loans for 3 percent down. About 1,000 lenders offer this new program, backed by Fannie Mae. In general, itÛªs for borrowers with household incomes at or below the median income for their area. In Nashville, that means incomes up to $41,000; in Hartford, itÛªs $51,900. Some lenders, however, such as GE Capital Mortgage Corp., go to 115 percent of median incomes.</br></br>The down payment has to come from money you saved yourself and borrowers have to attend courses In home buyer education. For a free list of Fannie Mae lenders in your area, call 800-7-FANNIEÛÓbut wait until April to call. Then, the list will note which lenders allow 3 percent down and which still want 5 percent down.</br></br>ÐÊ Loans for 5 percent down, To qualify for middle-income programs that are privately insured, you have to save 3 percent of the down payment yourself. The other 2 percent can come from gifts, grants or loans. Conventional loans for higher-income people also are available at 5 percent down, although 10 percent is more common.