Non-traditional forms of credit offer low-down payment terms
Low down-payment mortgages are an option to consider when credit scores are low.
A new trend in lending is offering its mortgage loans with a near zero low down-payment. Bank of America has recently rolled out a lending plan that will offer its customers mortgages at only 3% down.
Of course, there are negative consequences of low down-payment programs such as FHA loans. Notably, low down-payment requirements create higher monthly payments. Consequently, the borrower will pay higher interest amounts over the life of the loan than other loan programs. However, for many home buyers with low credit scores, this loan program could be viewed as a great opportunity.
Other other large banks offer similar programs
By considering non-traditional forms of credit and creating education programs for first time buyers, Bank of America gives hope to people who never believed they had the means to buy a home. Of course, Bank of America is not alone in this venture. Wells Fargo, in a recent partnership with NeighborWorks America, has created a program for down payment aid. Wells Fargo’s program is currently only available in a handful of communities.
You should also check with local lenders to see what programs they can offer.
More lending options may exist for select properties
In addition, other home buyers may find loan options for rural communities via the USDA/RHS rural home development loans. The eligible land is far larger than many might expect, covering nearly one-third of the U.S. These mortgages are backed by the federal government and offer low-down payment features.
Are in the market for a home, but worried about your credit or making a down payment? Learn more about these newly offered lending programs from the articles covered here. Lastly, be sure to study the “know before you owe” initiative and obtain a Good Faith Estimate from your lender.