There is such a wide variety of different loan programs nationwide that it’s sometimes next to impossible to take special notice of any.
Yet once in a while, a new loan package enters the market with a fancy and memorable name. And it has some unique features too.
Even better when it’s features seem to cater to someone like you!
But do you need to be special to be eligible for special financial programs?
So many lenders have spruced up all over the country. And many of them specially cater to niche markets that traditional big banks choose to overlook.
These include those associated with a history of:
- No income
- Bad credit
There is every chance that you are going to qualify for one no matter how unique you feel your situation might be.
In fact, for every mortgage you’ve come across that seems to be conceptualized for someone in your situation, there are probably 10 more available in the market which you are unaware of.
Why you are “not eligible”
The main reason why many home owner and buyers think that they do not meet the criteria for special loan programs is that they have walked into the office of a big lender.
These lenders only sell and originate their own loans. So when a prospective borrower fails to obtain approval of a special loan and gets denied, he thinks that the game is over.
The lender then informs the borrower that the only loans he would be eligible for are traditional home loans… which he also cannot be approved for…
You might laugh at how uninformed some people are regarding the lending industry. But this is a problem that still exist today.
The fact of the matter is, no matter how unique or special your personal situation is that prevents you from obtaining a conventional mortgage, there’s probably more than a few special loan programs that are catered for these specific circumstances.
Example – FHA
FHA loans are home loans insured by the Federal Housing Administration.
The national objective of the organization is to help people own their own homes.
This is why they can grant very flexible criteria for people who need them the most.
Some loan programs offered by FHA can even allow borrower to make a cash investment of less than 3% of property value!
If you carefully go through all the programs tat FHA offers, you might even find some special terms that make them even more attractive.
For example, some can allow gifts as down payments to effective fund 100% of a house!
This was exactly what a home buyer of knoxville found out. He was totally prepared to make a 5% down payment. But was thrilled when he realized how great FHA was at understanding this financial position.
Would it astound you that FHA is just the tip of the iceberg of special loans?
How to find special mortgage loan programs
You could of course go to each agency and find out about their loan offerings one after another.
But that can be a tedious affair to undertake.
While well-known financial institutions only sell their own loans and would turn a customer who don’t meet their underwriting standards away, broker don’t do that.
This is because the former only have their own list of products to sell, while broker have a whole basket of mortgage loans from different lenders to promote.
This means that should a borrower be unable to qualify for a specific loan, a broker would have alternatives on hand.
It would be almost impossible not to be financed when you meet up with a broker.
They would run down qualification screenings from loan to loan starting with the ones with best interest rates and terms… until you qualify for one.
The main drawback with getting serviced by brokers is that they need to make a profit as well.
So do expect higher interest rates and points compared to a traditional lender.
Finally, don’t forget when you are highly leveraged (above 80%) that you might incur higher closing costs than normal.
One such cost is mortgage insurance.
So do weigh up the pros and cons, gains and losses, when deciding whether to go with special financing programs.
Start with the APR when making comparisons.