We rarely have someone call who wants to pay the HIGHEST Mortgage rate and figure out what the MOST expensive PMI Rates are! LOL! Everyone wants the BEST PMI Rates, and the LOWEST Mortgage rate available. In North Carolina – there’s a new program, that helps borrowers get the LOWEST PAYMENT (which is actually what we should all be shooting for)!
The NC Affordable Mortgage, is not offered by all Banks in NC, but it DEFINITELY offers the BEST PMI RATES for low down payment mortgages in NC!
The new Conventional Loan Program requires that you have a middle credit score of 640, but even if you have a VERY high credit score, over 780 (for instance) you will likely get a lower payment, and lower PMI Rate using the new program we offer through NCHFA.
Qualifying: The Affordable Home Program
With the new First Home /Affordable Mortgage, you will need to put 3% down on the house, so you would be borrowing $97,000 on our “example” $100,000 house. In the past, you would have been required to cough up $5000 for a down payment – AND it all had to come from your own hard earned savings.
Now, all of that money can come as a gift or a series of gifts… or a GRANT from the State of North Carolina. We’ve seen folks who recently got married, and those who graduated from college, and part of the money came from money they saved living at home, and part was a gift from two or three family members.
With this program, 3% of the down payment can ALSO, come from the NCHFA Grant Program.
The Closing Costs associated with buying the house can be paid by the Seller or Builder, so you really can buy a house with VERY LITTLE money out of your Pocket!
The maximum income for the person (or combined income if there’s more than one person applying for the mortgage) is $85,000 in NC. Now, that’s NOT “Household Income,” which is what we have to look at for USDA Home Loans NC and other NCHFA Programs. We only have to meet the $85,000 for the applicant – which is NOT to say that if you are married, and your wife (for instance) buys the house in her name only, that you give up your portion of ownership. That’s not how it works in NC.
More good news about Qualifying for The First Home/ Affordable Home Program:
- There are no “restrictions” regarding WHERE the property is located, like there are for USDA Home Loans in NC
- There are no Sales Price Restrictions, and Maximum Loan Limits (like there are for FHA loans, and other NCHFA Loans) – you just have to qualify to make the payments.
- You do NOT have to be a first time home buyer to qualify for The Affordable Home Program, you just can’t own ANY other property at the time of closing.
- This is a 30 year fixed rate program ONLY – at this time there are no adjustable rate mortgages offered, and the rate for the program is SET by the STATE.
BEST PMI RATES For Low Down Payment Loans in NC
Most folks who are buying a with a sales price of $100,000 (or more) will need a mortgage. If you get a mortgage, and you are putting less than 20% down, you are going to have some sort of PMI – no matter what KIND of mortgage you get.
It’s counter-intuitive, but the mortgage interest rate on this program is HIGHER than the BEST Mortgage Rate we offer for Conventional Loans… however, the OVERALL PAYMENT is significantly lower – so stay with me as I explain the way the program works. Because it really can save you THOUSANDS of dollars!
The example below is based upon a $100,000 sales price, with 3% down payment and a loan amount of $97,000. We used a middle credit score of 740 – however, if the borrower has a middle credit score LOWER than this, the savings are actually MORE. The NCHFA First Home / Affordable Home program requires a middle credit score of at least 640.
DISCLAIMER: The interest rates quoted below are for EXAMPLE PURPOSES ONLY. The rates for this program are set by the STATE, and change on a weekly basis, so you will need to call us to get a CURRENT quote. This is based upon what we were able to offer the day this blog post was written.
As you can see, you are saving $34.22 a month by using this program to get the LOWEST PMI Rate in NC. That’s $2,053 in five years – that’s S-A-V-I-N-G-S!
Conventional Mortgage Interest Rates are based upon Risk. So if your credit score is BELOW the 740 we were calculating here… well, your interest rate is going to be higher. In some of the cases I looked at today – you might be paying a rate of 4.5% (5.145% APR) on the “Traditional Loan” I used in this example. PMI Rates for a Conventional Loan are ALSO tiered based upon the Risk (READ: If you have a score below 740, your PMI rate for a “traditional loan” is ALSO at a higher rate!).
The great thing about the PMI Rates for the First Home / Affordable Home Program is that the rates do NOT CHANGE. So if your score is 660, or 640, and you qualify for the program, you can still get a mortgage with the BEST PMI RATE of .18!
Conventional PMI is TAX DEDUCTIBLE for many taxpayers. I’m not an accountant – you need to see one, but as I understand it, you get the deduction as long as you meet certain income limits on your adjusted tax returns. As I understand it, the Adjusted Income Limit is $100,000 – meaning when you are over that amount, you will not be able to write off as much. Again, this is all subject to change each year by Congress.
Additionally, since 1998, you will automatically have PMI taken off your loan once you meet 78% of your original sales price. So you don’t have to pay PMI for the life of the loan!
If you are looking for a mortgage loan that allows you to live where you want to, with the lowest monthly payment, and the BEST PMI RATES IN NC – then call us about the First Home / Affordable Home Program. Steve and Eleanor Thorne 919 649 5058. We love helping folks figure out how to save money, get the lowest PMI rates and buy their dream home!