My Community mortgage

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No money down programs & 100% financing
FHA programs 

 Program changes
Mortgage Insurance companies who cover Fannie Mae's My Community program may not cover 100% financing loans due to tightening of their guidelines and moving to 97% or 95% financing.  This program at 97% will allow a 6% credit from the Seller.  This can go towards closing costs, prepaid items, to pay off your Mortgage Insurance premium, and more. 

In the current lending environment many borrowers are obtaining an FHA loan.  My Community 100% financing is becoming much more difficult to obtain AND is carrying higher rates and mortgage insurance.  If you can get together 3%, getting an FHA mortgage may be a great solution for you, especially if your credit is not excellent.  FHA qualifying is much more flexible, the rates are low, and the mortgage insurance is cheaper and is financed into the loan.

Choice Finance® lends on the Fannie Mae, My Community program.  This program is designed for moderate income home buyers who have limited funds for the down payment and closing costs.  Higher fico scores will improve your approval odds greatly.   This is a full documentation program.  We offer additional qualifying flexibility for teachers, police, military personnel, firefighters, health care workers, and those borrowers with disabilities..  

There are income limits for this program.  Borrower's income must not exceed 100% of the medium income for the designated area.  Check the HUD income limit for your area, for example, the HUD income limit for My Community loan in Montgomery, Prince George's, Calvert, Charles, and Frederick County, Maryland is $94,500.  Even if you exceed the income limits, you still have a shot to qualify if your home is located in a Fannie Mae eligible designated area.  Give your Loan officer the exact address of the property so we may look it up to see if your property qualifies you even when your income does not.

With My Community, Lender Paid MI is an option.  This means that you can opt for a slightly higher interest rate so you will have no mortgage insurance.  If you choose the mortgage insurance option, My Community allows for a reduced MI of 20% coverage or a factor of .59%, and there is no upfront fee (fha has).  A $180,000 loan would cost $88.50/month, which is $54.50 less than the old premium calculation of $144.00/month.  The loan must get approved through our automated Fannie Mae engine first, to get this lower MI rate.  There's actually an easy way to get this mortgage insurance to be $0/ month, contact us for details.
*My Community mortgage insurance calculator


Example
We had a client that has been a teacher in Montgomery County, Maryland for three years.  He and his wife are both teachers and each make about $40,000 a year.  Jim’s ability to save money is minimized by his rent, auto loan and paying off his student loans.  Jim had a friend that was selling his condominium and approached him to ask if he would be interested in purchasing it.  Jim assumed that there wasn’t much of a chance of being able to purchase a home given his current financial situation.  Although Jim’s credit score was in the 700’s he didn’t have much in assets to show... about $3,000 in retirement and only a couple hundred dollars cash on hand. 

The condo that Jim wanted to purchase was $283,000 and he didn’t have money for the down payment, let alone cover his closing costs.  Jim expressed a strong desire to become a homeowner, yet that was over-shadowed by his lack of income and savings.  The My Community Program allows up to 6% concessions from the seller; and in this case the seller offered 3%, enough to cover Jim’s closing costs and escrows that added up to $7,719.  One of our underwriters ran it through the Fannie Mae’s automated underwriting system and received an "approved/eligible".  Jim’s middle score was a 750, and his wife’s was 665.  Their debt-to-income ratio was a 52%, which is way above the standard 40% or less for conventional financing!  Their good credit scores qualified them for reduced mortgage insurance of $139.14 a month.  When all was said and done between principal, interest, taxes, and condo fee…  Jim and his wife are paying a total of  just under $2,200 a month. 

We closed Jim’s condo purchase one week later.  Jim is now living the American dream of home ownership, and what is truly amazing is that Jim didn’t need one dollar at settlement.  In fact he received money back, because he initially gave the seller a $500 earnest money deposit (standard practice) with his sales contract.

Alex Echeandia In the current mortgage environment it is making more sense to put at least 3% down.  Stricter qualifying guidelines and more expensive mortgage insurance at 100% is making the obvious choice 3% down when you compare both options.  I look forward to the opportunity to work hard for you and present you with all the options you qualify for.
Alex Echeandia

 

 

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