Ohio
103% Home Loans
The 103% LTV
is a conventional fixed rate home loan where the monthly payments
remain the same over the life of the loan. Once the mortgage is
in effect, the interest rate does not fluctuate but remains constant.
Furthermore, the loan is 103% of the sales price of the home.
This allows for 3% of the loan amount to be used towards the buyer's
closing costs.
The
fixed rate loan is one of the most commonly used mortgages for
residential financing in America. The greatest advantage for a
home buyer is the predictability of the payments each month because
it never changes. This type of loan is often recommended for home
buyers living on a fixed income, a set budget, or those planning
on living in their home for more than five years. If interest
rates increase, the loan rate will remain the same. Unfortunately
should rates decline below the set interest rate on the loan,
the only way to change it is to refinance the mortgage and incur
a loss of equity or additional closing costs to take advantage
of the lower interest rate.
The
key disadvantage of this type of loan is the high loan amount
in relation to the value of the home. Generally a home buyer must
occupy the home for at least three to five years before he/she
is able to cover normal selling costs should that become necessary.
Otherwise there may not be enough equity to cover real estate
commissions and typical seller costs when the home is sold.
The
following are highlights of this loan program:
Down
Payment Requirements: No down payment required. The loan amount
is 100% of the lesser of the appraised value or the sales price.
Excess loan proceeds may be used towards traditional closing costs,
prepaid items, and consumer credit. If the borrower elects to
use the excess proceeds towards consumer credit, revolving or
installment debt may be paid at closing to help the borrower qualify.
Income
and employment: There are no limitations placed upon income
requirements. As for employment, there are no limitations on a
specific length of time at a particular job. However, a 2 year
history is required, preferably in the same line of work (education
can be counted towards this 2 year history if it is for the same
profession the borrower is currently in).
Eligible
properties and occupancy requirements: Single family attached
and detached homes, 2 to 4 unit properties, planned urban developments
(PUDs), and Fannie Mae or Freddie Mac approved condominiums. Investment
properties are not allowed with this program.
Closing
Costs: Closing costs and prepays may be paid by interested
parties (i.e. seller) as long as they are considered in the contribution
limitation. For primary and second homes, the seller may contribute
up to 3% of the sales price. Excess loan proceeds may be used
towards traditional closing costs, prepaid items, and consumer
credit. If the borrower elects to use the excess proceeds towards
consumer credit, revolving or installment debt may be paid at
closing to help the borrower qualify.
Assumability:
This type of loan is not assumable.
Pre-payment
Penalty: Not applicable.
Cash
Reserves: The borrower is required to have a minimum of two
months cash reserves in the bank by the close of escrow. Six months
cash reserves may be required for borrowers with less than a 680
credit score.
Gift
Funds: Not allowed
Credit
Scoring: Generally Fannie Mae and Freddie Mac require a minimum
credit score of 620 for owner occupied and second homes.
Cosigners
(Non-Occupant Co-Borrowers): Not allowed.
Qualifying
Ratios: A borrower's total debt (proposed monthly payment
plus monthly payments towards credit cards, student loans, car
payments, and other installment and revolving credit) cannot exceed
45% of their gross monthly income.
Mortgage
Insurance: Not required.