If one of your goals is to become a homeowner in the states of Massachusetts or Rhode Island but you don’t have the down payment money, there are a couple of loan programs for you.
Many home buyers and sellers are still under the impression that 20% down is still needed in order to purchase a home in Massachusetts and Rhode Island. And although it’s terrific if you were able to save 20% for the down payment, it just isn’t the norm. There are more less than 20% down buyers than any thing else. The most widely used loan program is the FHA 3.5% down payment. But for those that are Veterans or are looking in rural areas, there are loan programs that require no money down!!! Yep, 100% of your purchase price can be financed!
Let’s breakdown the one of the loan programs available that allows you to buy a home with 100% financing.
VETERANS 100% LOAN PROGRAM (OR VA LOAN):
The first is the VA Loan or Veterans Loan. As the name indicates, you must be a Veteran. To be eligible for a VA Loan, veterans, active duty service members, National Guard members and reservists must meet the basic service requirements set forth by the Department of Veterans Affairs. Spouses of military members who died while on active duty or as a result of a service-connected disability may also be eligible.
It’s ultimately up to the VA to determine eligibility for the home loan program, but prospective borrowers can get a good idea by looking at the VA’s basic eligibility guidelines.
- You have served 90 consecutive days of active service during wartime, OR
- You have served 181 days of active service during peacetime, OR
- You have more than 6 years of service in the National Guard or Reserves, OR
- You are the spouse of a service member who has died in the line of duty or as a result of a service-related disability.
To obtain VA financing, the Veteran must have a Certificate of Eligibility or COE.
While you don’t need your VA Certificate of Eligibility in hand to start the loan process with Veterans United, this certificate is a very important part of your loan application. Your COE verifies that your length and character of service make you eligible to use the VA home loan benefit.
You can apply for a VA Loan Certificate of Eligibility three different ways:
- Apply through a VA approved lender
- Apply online through the VA’s eBenefits portal
- Apply by mail with VA Form 26-1880
YOU MUST ALSO KNOW:
Even though the loan program is 100% financing, people often think this means no-money down. This is a big misconception with these loan programs. You are financing 100% of the purchase price, the Veteran will still need money for a down payment and closing costs. The 100% only refers to the purchase price. The typical down payment is 3% of the purchase price. This money does get applied to the downpayment on the purchase price and typically this will go back to you, the Veteran, at the closing and after the closing costs and pre-paids have been deducted.
The reason that you still have to put down some money is because you are submitting an offer on a home and you need to have what is called “consideration” for the contract. Consideration is what binds the legal contract, without it, it’s not a contract. But the biggest reason is that you are asking a seller to stop marketing the home and miss out on other buyers. If you don’t put “skin in the game”, how do you expect a seller to trust that you will go forward with the purchase. A seller wants you to put some money at risk so that is their insurance that you will move forward and not walk away. See EARNEST MONEY for a more detailed explanation.
We have been able to put together deals when a buyer put down $2500.00 as the down payment because that is all they had and we are oftentimes able to get the closing costs covered by the seller. But know that this is not always the case and shouldn’t be relied upon but it’s always worth trying because the worse the seller and their real estate agent can say is no.
Other items you can be prepared to pay out of pocket for is the home inspection and appraisal and the home owners insurance so you should make sure you have the funds needed for this as well. The average home inspection costs between $400 – $650. Appraisals range from $375 – $800 and home owners insurance can range from $700 – ???.
The VA also requires a Pest Inspection be completed at that time of the home inspection. A report Pest Report Form. A Veteran isn’t supposed to pay for this service, but a Seller nor their real estate agent rarely ever agrees to pay.
If you would like more information or to get pre-approved for a VA 100% Financed Loan, I would encourage you to speak with either of our trusted lenders:
Rebecca Gilbert – Randolph Savings or John Faria – Province Mortgage
The other loan program for 100% Financing is USDA. Click here to go to 100% Financing – USDA
5 Things You Need To Know About VA Loans
What Is A VA Loan
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To begin working with Lori and Chris, text or call 508 254 8093 (Lori) or 781 354 4381 (Chris) or complete the form below. Or email us Key To The Dream