Q & A: Low Down Loans

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  1. Are there low-down-payment home loans?
  2. Are there state programs for home buyers?
  3. Do I have to disclose a parent's gift?
  4. What is PMI?
  5. Where can I learn more about PMI?

Are there low-down-payment home loans?

Yes. The U.S. Department of Housing and Urban Development (HUD) offers low down-payment loan programs through the Federal Housing Administration (FHA). Learn more details on the FHA website

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Are there state programs for home buyers?

Yes, most states offer home buying programs to their residents. The HUD website has links to state information http://www.hud.gov/buying/localbuying.cfm

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Do I have to disclose a parent's gift?

When purchasing a home, a lender can ask to view your financial account statements for the last few months (generally the last 60 or 90 days). In doing so, they will research how your funds were obtained. If you obtained money as a gift during that time, your lender may ask for a gift letter from the giver stating that no repayment of the gift is expected.

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What is PMI?

PMI stands for Private Mortgage Insurance, which is a fee lenders add on to loans when borrowers put less than 20% down. This fee serves as added insurance to the lender since the borrower does not have much financial equity in the home.

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Where can I learn more about PMI?

PMI, which stands for Private Mortgage Insurance, is generally required when a down payment of less than 20% of purchase price is put down on a home. Rates vary by lender, but generally PMI is percentage of the loan amount (around .50%). Before committing to a lender, ask them about their PMI rates and stipulations.

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