teachers, firefighters, police officers, health care workers loan – is it a good deal or not?

July 23, 2010 — Leave a comment

THINK TWICE BEFORE ASSUMING A PROGRAM GEARED SPECIFICALLY FOR A PARTICULAR CLIENT IS THE BEST PROGRAM AVAILABLE TO THEM.  freddie mac has a loan product titled “home possible neighborhood solution” which is geared towards teachers, firefighters, law enforcement officers, health care workers, and military personnel.  there have been several mortgage companies pushing this product, yet very few of them can actually explain it.  i think that it is commendable that freddie mac has recognized these community leaders and servers with a home loan product specific to them.  HOWEVER, lenders and loan officers need to do a better job of truly understanding this program (pros and cons) before marketing it. 

PROs

the down payment requirement is “as little as” 3% – that’s great!  the mortgage insurance is “reduced” – still great!  the down payment can be a gift – great!

CONs

in order to qualify for the 3% down payment you MUST have a 680 score for their best term – well that eliminates the vast majority of america  – not great!

the “reduced” mortgage insurance is still the same or greater than FHA’s mortgage insurance – not great! 

you MUST receive and “automated” approval for the 3% down payment option – manually underwritten loans are NOT acceptable – not great! 

there ARE income LIMITS to no more than the median income – not great!

you MUST be a first time homebuyer not having ownership in a property in the previous 3 yrs – not great!

seller contribution is capped at 3% – FHA is currently at 6%!

although this a “better” product than your typical conventional loan requiring 5% down payment and higher mortgage insurance this, in my opinion, is NOT as attractive as an FHA loan which has NO income restrictions, NO first-time homebuyer requirement (can be your 2nd, 3rd, or 15th home), LOWER mortgage insurance, LOWER credit score requirement, and overall more flexible underwriting guidelines with a lower interest rate.

just wanted to make sure you were “in the know”.

your keeping you “in the know” loan officer,

-Cole

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