Buy Home with 3% or Less Down

If you're dreaming of buying a home, congratulations. You're in good company! Almost two-thirds of the nation's households own their own home.
This article describes how families can get into their own homes with little cash up front. It explains mortgage insurance and how it works, and looks at the two options -- private mortgage insurance and government mortgage insurance.
Homeownership remains one of the highest goals for many people because of its many benefits. Along with owning your own home comes a sense of security and belonging that cannot be found elsewhere. For many, homeownership represents personal and financial success.
There is much personal satisfaction in living in a home that you own. A home is still a valued investment which can have many financial advantages and tax benefits. The amount of interest you pay on a home loan and the real estate taxes you pay on your home are among the few major federal tax deductions. Owning a home is the primary way most people build wealth.
Homeownership is also good for our communities, because families who own their homes are more involved in their local communities and participate in local events.
The rewards of homeownership:
Personal satisfaction
Sense of community
Tax savings
Stability for you and your family
Investment in the future
Still, for many Americans, owning a home continues to remain just slightly out of reach. For more and more families, saving the money for a down payment is the biggest obstacle to homeownership. Many people mistakenly believe that you have to come up with a down payment equal to 20 percent of the price of a home.
Traditionally, lenders have required that home buyers be able to make a down payment of at least 20% of a home's purchase price to get a home loan or mortgage. However, mortgage lenders will grant home loans to qualifying home buyers with a down payment of as little as 3 to 5 percent of the purchase price, if the mortgage is insured. In fact, home loans with down payments of less than 20% are increasingly popular. They are called "low down payment mortgages."
This is good news for the millions of home buyers who are finding it difficult to save a large down payment, especially for their first house.
Simply put, mortgage insurance protects the mortgage lender against financial loss if a homeowner stops making mortgage payments. Lenders usually require insurance on low down payment loans for protection in the event that the homeowner fails to make his or her payments. When a homeowner does not make mortgage payments, a default occurs and the home goes into foreclosure. Both the homeowner and the mortgage insurer lose in a foreclosure. The homeowner loses the house and all of the money put into it. The mortgage insurer will then have to pay the lender's claim on the defaulted loan.
For this reason, it is crucial that the family buying the home can really afford it -- not only when they buy , but throughout the time period of the loan.
Although the cost of the mortgage insurance is paid by the home buyer, or borrower, the mortgage insurer works directly with the lender. Mortgage insurance is available to commercial banks, mortgage bankers, and savings & loans, and all of which offer mortgage loans to home buyers. Remember that mortgage insurance is not the same as credit life insurance, also called mortgage life insurance. This type of policy repays an outstanding mortgage balance if the person who took out the insurance policy dies.
The Secondary Market
The lender's decision to use mortgage insurance is driven by the requirements of investors in the mortgage market. Because of the losses that could occur, major investors require mortgage insurance on all loans made with low down payments.
The three primary investors in home loans are Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) and Government National Mortgage Association (Ginne Mae). By purchasing and selling residential mortgages, Fannie Mae and Freddie Mac help keep money available for homes across the country.
Unlike Fannie Mae and Freddie Mac, Ginnie Mae does not actually buy the mortgages. It adds the guarantee of the full faith and credit of the U.S. Government to mortgage securities issued by private lenders.
The Two Choices: Government Insurance and Private Insurance
Now that we have explained how mortgage insurance works and why it is necessary, let's look at the basic kinds of mortgage insurance. Low down payment mortgages can be insured in two ways -- through the government or through the private sector.
Mortgages backed by the government are insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) or the U.S. Department of Agriculture's Rural Housing Services (USDA-RHS).
The minimum effective down payment required by FHA is less than 3 percent. For single-family homes, there is a limit on the loan amount that varies according to geographic area.
EARLY ON IN THE HOME-BUYING PROCESS, IT IS A GOOD IDEA TO MEET WITH SEVERAL LENDERS TO COMPARE THE TYPES OF MORTGAGES THEY OFFER AND SHOP FOR THE BEST PRICE AND TERMS. Although anyone can apply for FHA insurance, the other two government mortgage guarantee programs are much more targeted. The VA program is limited to qualified, eligible veterans and reservists. The USDA Rural Housing Service insures loans for the construction and purchase of homes in rural communities. This program is very specialized, so contact your lender for the details. More at www.mawestrealty.com.

Housing Market in Springfield, Massachusetts

The following is a snap shop of the current Housing Market in Springfield, Massachusetts. The information is gathered on all active homes for sale in Springfield, Mass according to the National Multiple Listings Service (MLS) as of 02/21/2006. The following data is based on the market in the Springfield Massachusetts.

Market Trends

No. of Home Under $100K-36 Avg Price $79,586 Avg time on Mkt 67.11 Days
No. of Homes Btwn 101k to 120k - 42 Avg Price $112,527 Avg time on Mkt 72.95
No.of Homes Btwn 121 to 150K - 145 Avg Price $138,509 Avg time on Mkt 64.48
No.of Homes Btwn 151 to 200K - 189 Avg Price $173,802 Avg time on Mkt 68.31
No.of Homes Btwn 201 to 250K - 46 Avg Price $225,225 Avg time on Mkt 85.54
No. of Home Btwn 251 to 300K - 26 Avg Price $279,135 Avg time on Mkt 157.31
No.of Homes Btwn 301 to 400K - 9 Avg Price $339,956 Avg time on Mkt 62.22
No.of Homes Btwn 401 to 710K - 4 Avg Price $518,750 Avg time on Mkt 162.25
No.of Homes Btwn 711k to 1mil 1 Avg Price $949,900 Avg time on Mkt 246

Springfield, Mass Totals: 498 Avg Price $169,320 Avg Days on Mkt74.25

The Above Stats are for the following area:
Totals:

East Forest Park: Single Family Listings: 61 Avg List Price: $191,310 Avg Market Time71.46
East Springfield: Single Family Listings: 43 Avg List Price: $150,935 Avg Market Time: 63.40
Forest Park: Single Family Listings: 59 Avg List Price: $196,519 Avg Market Time: 73.17
Hill McKnight: Single Family Listings: 51 Avg List Price: $141,164 Avg Market Time: 71.16
Indian Orchard: Single Family Listings: 21 Avg List Price: $145,971 Avg Market Time: 72.57
Liberty Heights: Single Family Listings: 21 Avg List Price: $149,095 Avg Market Time:100.14
N Brightwood: Single Family Listings: 0
Pine Pt Bstn Rd: Single Family Listings: 71 Avg List Price: $151,955 Avg Market Time: 88.21
Sixteen Acres: Single Family Listings: 70 Avg List Price: $193,595 Avg Market Time: 68.99
South End Central:Single Family Listings: 12 Avg List Price: $179,508 AvgMarketTime: 83.42

To obtain more information on cities in Western Masssachusetts visit www.mawestrealty.com

VA Home Loans

VA Home Loans for Vets
More than 27 million veterans and service personnel are eligible for VA financing. Obtaining a VA home loan is easier now than ever before, thanks to today's computer age. These loans are made by a lender, such as a mortgage company, savings and loan or bank. VA's guaranty on the loan protects the lender against loss if the payments are not made, and is intended to encourage lenders to offer veterans loans with more favorable terms.
There are six steps in obtaining a VA Home Loan:
1. Find the property suitable for your needs
2. Go to a lender, and apply for the loan
3. Present your discharge or separation papers relating to latest period of service and/or a Certificate of Eligibility
4. Property is appraised by approved appraiser
5. Estimate of property's reasonable value is determined
6. If application is approved, you get the loan
These loans are often made without any down payment at all. Aside from the veteran's certificate of eligibility and the fact that the appraiser is assigned by VA, the application process is not much different than any other type of mortgage loan. And if the lender is approved for automatic processing and the Lender Appraisal Processing Program (LAPP), as more and more lenders are now, a buyer's loan can be processed and closed by the lender without waiting for VA's approval of the credit application or for VA to review the appraisal. Lenders are also able to use VA recognized automated underwriting systems, such as Loan Prospector and Desktop Underwriter, to facilitate the underwriting process.

WHO IS ELIGIBLE?
Veterans with active duty service, that was not dishonorable, during World War II and later periods are eligible for VA loan benefits. World War II (September 16, 1940 to July 25, 1947), Korean conflict (June 27, 1950 to January 31,1955), and Vietnam era (August 5, 1964 to May]7, 1975) veterans must have at least 90 days' service. Veterans with service only during peacetime periods and active duty military personnel must have had more than 180 days' active service. Veterans of enlisted service which began after September 7, 1980, or officers with service beginning after October 16,1981, must in most cases have served at least 2 years.
Gulf War. Basically, reservists and National Guard members who were activated on or after August 2, 1990, served at least 90 days and were discharged honorably are eligible. VA regional office personnel may assist with eligibility questions. Members of the Selected Reserve, including National Guard, who are not otherwise eligible and who have completed 6 years of service and have been honorably discharged or have completed 6 years of service and are still serving may be eligible. Contact the local VA office to find out what is needed to establish eligibility.

Receive further resources at www.mawestrealty.com

Real Estate Massachusetts

FIRST TIME HOME BUYERS

Benefits of Home Ownership:

Buying your first home? Not sure of the benefits of being a First Time Home buyers? Are there any real benefits or advantages in Home Ownership?

Renting your home or apartment can have some advantages. Of course you don't have to worry about repairs, scheduled maintenance, grass cutting and if you live in the Northeast or Midwest, you don't have to worry about buying a snow blower. As a renter you can petty much come and go as you please. Or can you? Is there someone telling you when to be available for scheduled maintenance or repairs? Is there someone telling you that you are not allowed more than 4 guest without prior approval from the management office? Do you have to get an OK when you want to have a July 4th barbecue?

The biggest benefit of owning your own home is pride in knowing that you own that land that's beneath your feet. You know that your home ownership is the direct result of years of hard work and financial discipline. And no one, but no one, can tell you when you can have a good old fashion American barbecue and how many guests to invite. Renting, in many cases, cost just as much if not more than paying a mortgage.

The advantages of owning a home far outweighs those of renting. A portion of the mortgage you pay goes to paying off the principle of your loan. Which means you will eventually own the home outright.

Owning a home may be easier than you think. HUD has many programs available in many states to assistance you in obtaining your first home. The IRS has publications available to inform you of the tax advantages of homeownership.
Did you know that most, if not all, the taxes and interest you pay on a home is tax deductible?
Obtain more information at: http://www.mawestrealty.com/1st_time_buyer.htm
http://www.hud.gov/offices/hsg/sfh/buying/buyhm.cfm
http://www.irs.gov/pub/irs-pdf/p530.pdf
http://www.irs.gov/pub/irs-pdf/p936.pdf