Stop paying rent: Mortgages with down payment assistance

This post is the last in my series showing different options for buying a home using mortgages with low down payment options. The series started from a posting I saw on Facebook where one of my West Seattle neighbors is trying to find a place to rent that accepts pets. This is my handsome pup, Hitch, who might not be allowed in most apartments since he’s over 65 pounds…even though he’s just a big puppy.  🙂

My previous posts compared using Fannie Mae’s Home Ready program and an FHA mortgage with the goal of keeping the total mortgage payment around $2200.

This post will be using a program from the Washington State Housing Finance Commission which offers down payment assistance. The down payment assistance is actually a second mortgage at zero percent interest that is tacked on to the end of the first mortgage. There are no payments due for 30 years (or when the first mortgage is paid off). Although the down payment assistance interest rate is zero, the interest rates for the first mortgages with this program tend to be higher (as you’ll see with my quote).

With WSHFC’s Home Advantage program, the income limit is $97,000 and credit scores must be 620 or higher.  Interest rates with this program, are not impacted by credit score, however, the private mortgage insurance rate is. With this quote, we are assuming credit scores between 700 and 720. Buyers are required to take a WSHFC sponsored home buyers class, which they can take “live” or online.

Sales price: $305,000

Total Loan Amount: $295,610

Interest rate: 6.000% priced with zero points using the 30 year fixed conventional HFA Preferred mortgage program (APR 6.462%). NOTE: Rates posted are EXPIRED! Click here for a current mortgage interest rate quote for your personal scenario.

Total estimated mortgage payment: $2,236.11. This includes principal and interest of $1,772.33; estimated home owners insurance of $50; estimated property taxes of $317.71; private mortgage insurance of $96.07.

Down payment assistance: $14,780 at 0% interest with payments deferred for 30 years (as long as you retain the first mortgage. Once you refinance or sell the home, the down payment assistance (dpa) will be paid off with the original first mortgage). NOTE: There is improved pricing on the first mortgage if you opt for less down payment assistance. This scenario is based on using 5% vs. 4% of the first mortgage loan amount.

Funds estimated due for closing: $4,535.74. This includes down payment, closing cost, prepaids and reserves (taxes and insurance).

If you’re tired of paying rent and are considering buying a home, I’m happy to help you…even if you still have a year left on your lease, it’s never too early to get prequalified and to start working on your preapproval by improving credit or focusing on savings. Often times, doing things that are “common sense” like paying off credit cards may actually not be the right steps for buying a home and getting preapproved for a mortgage.

Rates quoted may change at any time and loan program is subject to credit approval. This is just a small sample of the mortgage rates and programs that I have available. If you would like me to provide you with a mortgage rate quote for your home purchase or refinance on your home located anywhere in Washington state, please click here.

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