- Types of Mortgages

Neighborhood Gold and The Genesis Preferred Program are non-profit organizations that accept donations from new homebuilders and sellers. They then take a fee from that donation and apply the rest to the down payment on the purchase of your new home and closing costs on an FHA loan. The contract between you and the seller or builder must stipulate this information, and your lender or real estate agent must be familiar with these types of down payment assistance programs.

Zero Down Programs

There are some conventional programs that allow for the purchase of a new home with zero down payments. Such programs may be a mixture of an 80/20 or another second lien program. If you look into this option, you may find that having two liens at 100 percent financing has a lower payment than some of the other 100 percent products because you do not have to pay mortgage insurance. It is good to compare several different scenarios with the new homebuilder’s lender to see what will be the best choice for you.

Buy-down

A buy-down is not a loan, but a loan feature you might have that gives the option of ‘buying down’ the loan. The term 2/1 buy-down means that for the first year your interest rate will be two percent less than your fixed rate. The second year will be one percent less than your fixed rate, and on the 3rd year, your interest rate and monthly mortgage payment will adjust to the fixed rate. Lenders may require prepaid interest to add this feature on your loan. This amount may be paid upfront by you or new homebuilder if negotiated into the sales contract when you purchase a home.

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