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Sources of Down Payments  - Important Factors to Consider When Purchasing a Home!       
 
By: Chris Reh



When purchasing a home, there are many important factors to consider.  One big challenge facing today’s homebuyers is the down payment. It is not just what amount makes sense, or required per whichever loan program you choose, but it is also understanding the acceptable sources you are allowed to use towards your down payment.  

WHAT IS A DOWN PAYMENT? 
A down payment is a cash payment required at closing. In addition to the amount you borrow, this will be used towards the total purchase price of your new home.  Many states and counties offer additional down payment assistance programs to home buyers as well; contact me if your lender hasn’t explained this.   I am going to show you some creative ways you can source the funds needed for your down payment.



1. GIFT FUNDS

Maybe you have some generous family members that are willing to gift you cash to use towards your down payment.  This is great and completely acceptable under most loan programs out there. However, who qualifies as an acceptable donor and the amount allowed to give varies.  The donor must complete a gift letter stating that the money is indeed a “gift” and does not need to be repaid. The donor’s bank statement is required to verify.



2. TAX REFUND

Using your tax refund can add a sizeable contribution towards your down payment.   The estimated average tax refund is expected to be $2,200 for most Americans this year.  Some tax pros might recommend to pay debts, invest, donate, and or save. But with the younger generation working hard to overcome debt, a lack of savings and rising home prices; I think this is an effective, easy, and painless way to increase your down payment.

3. PROCEEDS FROM HOME SALE

Homeowners who choose to sell their home may simply use the existing equity proceeds towards their down payment on their new/next home.  Something important to consider is that one of the difficulties of selling your existing home while simultaneous buying a new home, is to get both the sale and purchase contracts to close in coordination.  Another great option is if you are buying a parent’s home, the equity in that home can be ‘gifted’ to the buyer as part of or the full down payment requirement.

4. YOUR BUDGET

Maybe a source one might easily overlook, however, by simply taking a fine tooth comb through your current budget, you can make some simple cuts to your monthly expenses and free up some additional cash to save for your down payment.  For example – cut costly cable services and start streaming what you watch on TV, or prep meals at home instead of eating out every day for lunch.  This may be easier than you think; definitely worth the try.  TIP: If able, refinance your auto loan at no cost.  In many cases, the result reduces your monthly car payment by a third or more; freeing up some nice cash while also lowering your Debt To Income Ratio.



5. RETIREMENT ASSETS

Your financial advisor may not be too excited about this option, but in some instances, borrowing from your retirement assets can have tremendous value to your down payment.  Retirement plans sometimes allow employees to borrower up to 50% of the vested balance to be applied towards a down payment when buying a home.  Using this approach, you may be able to reach 20% down payment on a conventional loan thus avoiding private mortgage insurance AND lowering monthly payment.  Use those savings to simply repay your retirement account through monthly payroll deductions.  If you go this route, please consult your financial advisor due to the potential tax implications involved.



6. ASSISTANCE PROGRAMS
You might not find an abundance of federal programs that help you, but many city, county, and state governments offer excellent programs to help homebuyers realize their dream of homeownership.  Most are positioned for first time home buyers, have income limitations, and will have specific requirements to qualify for, including but not limited to, purchasing homes that meet certain criteria and homeowner education courses.  It’s key to remember that these programs usually come with other stipulations, such as length of time you must occupy the home as your primary residence, that when broken, levy potential recapture fees.  TIP: Tap into these programs as soon as possible, because the annual funding diminishes as the year goes on.  If you don’t need the assistance for your down payment, then you can actually use those funds to pay your closing costs.

7. POWER PLUS 

Only available from your friendly mortgage banker at First Integrity Mortgage Services.  Ask your mortgage banker today how you can take advantage of the enormous benefits of our Power Plus options.  These also offer an amazing way to avoid private mortgage insurance with less than 20% down. 

As one of the largest cash purchases you’ll likely make, I believe it to be most crucial to work with an experienced lender you can trust, so you can begin planning and documenting the source of your down payment early.  At First Integrity Mortgage Services, we focus on educating and informing, walking you through different custom scenarios that match your needs, for all of the different loan programs that you qualify for.  Stop thinking you need a 20% down payment to buy a house.  You DON’T.   If you are a current homeowner or thinking of buying a home and have any questions about how much you will qualify for, interest rates, fees, credit repair plans, program guidelines, or have been told you currently don’t qualify by another lender, call me. Chris Reh. 314-420-3122. creh@firstintegrity.com NMLS# 1773185. 


By: Kiara Johnson

Home ownership is a core component in establishing and living the American Dream. Whether you are a first-time homebuyer, moving up/down, renovating, or become an investor, you need to have a game plan in place to ensure the most stress-free process as possible.
Many people forget the most critical step of the home buying process. They surf sites like Zillow, Realtor.com, and Red Fin browsing homes but have NO real idea of which route to go. 

The #1 step for purchasing ANY real estate is to talk with your lender. Your lender will be one of the most valuable people in the process. Your lender can give you insight on what price range you should be looking in, estimated payment to make sure you’re comfortable, or even what to expect during the process. The lender will also give you direction based on your desired goal. 

If you are a first-time homebuyer, your lender will discuss low down payment options along with any assistance that may be available. If you are looking for a renovation loan, your lender may advise you to set a general contractor in place to oversee the project. If you are looking to move up, your lender may inform you of the infamous Power Plus loan that allows you a 5% down payment with NO PMI. This is a step that is often overlooked but most necessary.  Your lender is your friend ☺ If you need help finding a lender, call me, I know the perfect one!

If you would like more information or have any questions, comments, or concerns, please reach out to Kiara Johnson, NMLS# 869292 directly at kjohnson@firstintegrity.com or 314-568-6389. 


By Jeremy Durham 

Have you ever found yourself in the market for a particular sized home in a certain school district, but everything you’re seeing appears to have last been updated by the Brady Bunch? Have you loved the location of a home, but found yourself walking away from making an offer due to avocado green appliances? Or peach and country blue wallpaper? Did you think to yourself “I wish I had extra funds to buy this home AND be able to remodel it?” What if you could buy a dated home, in the part of town you wish to live and renovate it to your tastes…all before you ever move in? Perhaps you should consider a Renovation Loan as an option. 

When you purchase or refinance a home, your appraised value is based on the value as the home sits right now. In the condition, it’s in, right now. With a Renovation Loan, your home’s value will be based on the projected After Improved value once your renovation work is complete. Adding square footage, an extra bedroom, bathroom, additional living space, all with more modern fixtures/appliances, means instead of the value of a 3 bedroom/2 bathroom home that you are buying/or currently own, your value will be based on comparable homes with 4 bedrooms and 3 bathrooms that closer meet what your home’s square footage WILL be after the work is completed. Also, all of this can be completed in one transaction with between a 3.5% and 5% down payment, or if you already own the home you wish to renovate this can be accomplished with all costs incorporated into your new loan.  

The Renovation option can also be successfully used by progressive listing agents who perhaps have a dated listing with linoleum floors, wallpaper in every room, a 1950’s pink bathtub, and tile etc. Market the home and provide potential buyers looking at that home with the great backyard in just the right school district, as what the house CAN be, not what it is right now! 

As a local mortgage banker, we specifically offer five variations of the renovation program. There are two types of FHA’s 203k which require a down payment of 3.5%. For our nation's Veterans, there is a VA Renovation option that requires no down payment. Fannie Mae’s HomeStyle option allows for much higher loan amounts than FHA and enables luxury features to be incorporated in your remodel, but still requires only a modest 5% down payment. First Integrity Mortgage has even taken this last product one step further and created a renovation program we refer to as Design Plus.

Design Plus starts with the foundation set forth by our very well-known Power Plus program that combines 1st and 2nd position liens to 1) either avoid costly mortgage insurance without having to make a 20% down payment, or 2) purchase a much more expensive home than conventional lending guidelines allow, all while still producing only a 5% down payment. The Design Plus incorporates Fannie Mae’s HomeStyle Renovation program that provides for a loan amount up to $484,350 (increased for 2019) and a 2nd position lien up to an additional $250,000. In essence, this program can allow a homebuyer (or a current homeowner) to renovate a home with combined loan amounts up to $734,350….all with a 5% down payment (or 5% equity in your current home), no presence of mortgage insurance, AND the rate of both loans are based on the current market 30 year fixed rate. 

Please give First Integrity Mortgage a call today, and we’d be happy to go over these options with you in detail, lay out a timeframe for lending and renovation completion, and get you on your way to having a home in that perfect neighborhood, that’s designed and decorated just the way you want it. 

If you have questions about improving or updating your home or know someone who is and would like more information on any of the renovation loan program, please contact Jeremy Durham at JDurham@firstintegrity.com or 314-856-5626, NMLS# 989777.


By Kiara Johnson

This is, by far, one of my favorite times of the year! It’s the time of year where most people come together and realize how important it is to be thankful for the many blessings we have. We know everyone’s story is different, and no one is dealt the same hand. This is why it is so important for us to give back while we can. 

Here at First Integrity Mortgage Services, we don’t wait until this time of the year to show support to our community. This is something close to all of our hearts and an ongoing trend year round. Once a quarter, First Integrity Mortgage picks an organization to give back. Money is raised among the employees and donated at the end of the quarter. The organizations chosen are usually near and dear to the employees here.

In 2018 the organizations were the following: 


1st Quarter 2018 – A Safe Place


2nd Quarter 2018- Leukemia & Lymphoma Society (LLS)


3rd Quarter 2018- ABC Brigade


4th Quarter 2018- Pink Angels

Although the majority of our donations come from our employees, everyone is welcomed to participate. If you would like to donate to FIMS current organization of choice, feel free to contact our office at 314-878-7900.

Backstoppers is another organization FIMS holds close to heart. Police officers, firefighters, and EMS workers continue to face significant challenges and make sacrifices for our safety every day. Supporting Backstoppers is one of our ways of saying “Thank You.” We give a $750 credit for every Backstopper loan we originate. The borrower receives $500 off closing cost, AND we donate $250 to the organization. 
We don’t stop there! Every year, in April, we host a Trivia Night in support of Backstoppers. 

Our first year in 2016, we raised approximately $8,000.
Our second year, we took it to a new level and raised over $16,000!  We didn’t stop there. In 2018, we hit a record of $22,000!!!  Everyone is welcomed to attend our trivia night. We will send out the details in early 2019.

Another group that we like to show our appreciation and support to is our Veterans, the individuals that have fought for our country and for our freedom definitely deserve a break and some recognition. Every VA loan that is originated, we waive our origination fee.  Just a simple way of saying “Thank You” and we appreciate everything you have done. So as we go into the holiday season, let’s show what the season is all about…Love, Peace, & Happiness!

If you would like more information or have any questions, comments, or concerns, please reach out to Kiara Johnson, NMLS# 869292 directly at kjohnson@firstintegrity.com or 314-568-6389. 
Happy Holidays!


By Jeremy Durham 

When you decide it’s time to begin searching for your first home, a step-up home, or even a downsize home, you should be provided with a number of loan program options and consulted on which best suits your specific personal and financial life. If you are or have been a member of our United States Armed Forces, you have access to a program that the majority of home buyers do not. A VA (Veterans Administration) Loan is reserved for Regular Active Duty, Retired Veterans, and Reservists who have completed 6 years of honorable service. 

Why would a VA Loan benefit me? 

Through the VA Loan program, a veteran is eligible for a 0% down payment loan, with NO monthly mortgage insurance! As this loan program is insured by the Department of Veteran Affairs, the interest rates are significantly lower than the rates offered on conforming loans as well. There is a popular misconception that VA Loan eligibility may only be used once, and this is inaccurate. While a veteran may only own one, owner-occupied home with a VA loan, you can sell a current home and use a VA Loan to purchase your next home, as long as you do not own two houses at the same time secured by a VA Loan. In addition to the Mortgage Insurance free loan and reduced interest rate, First Integrity Mortgage Services also waives our traditional $985 Commitment Fee at the time of closing out of respect for a veterans service to our country. 

Checking on Eligibility: 

If there are any questions regarding your eligibility for a VA Loan, I would be happy to request your Certificate of Eligibility from the Dept. of Veteran Affairs. I would just need a copy of your DD214 to get that started.  

VA Funding Fee:

While the VA Loan program does not involve mortgage insurance, veterans do need to be aware of the one-time VA Funding Fee. This fee is charged at closing on both Purchase and Refinance transactions, is rolled into your loan amount, and is paid to the Dept. of Veteran Affairs. The Initial Use VA Funding Fee is 2.15% of the loan amount (assuming $0 down payment) for active duty service members and 2.40% for Military Reservists. This percentage does decrease in the event a down payment is made by the veteran(s). 

After your first VA Loan, any additional VA Loans taken out will involve Subsequent Use VA Funding Fee of 3.30% regardless of Regular Military or Reserve status. A veteran can also refinance the balance of their VA Loan to reduce their interest rate with a VA IRRRL (Interest Rate Reduction Refinance Loan) with a .5% VA Funding Fee (this is for Rate & Term refinances only and not Cash Out refinances) and is designed to be Much more streamlined than an initial VA Loan. 

If you are an eligible Veteran or knows someone who is and would like more information on the VA loan program, please contact Jeremy Durham at JDurham@firstintegrity.com or 314-856-5626, NMLS# 989777.


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