Since our last discussion on first time home buyer financing, I will be sharing with you one of the various financing options available called the Champ Loan.
I’ve worked with many buyers and sellers for this program and it has worked well for them. It’s a program with less down for the buyer and no mortgage insurance. For sellers, a conventional appraiser is used for the property making it somewhat more manageable from the standpoint of less repair requirements on the property.
The maximum loan amount is 98% of the homes value in a stable market allowing the buyer to put 2% down with no cash reserve requirements. Perhaps you are just out of school or just finished paying off a vehicle, in these situations, cash on hand can be limited making this program appealing to many buyers. You may have the buying power, the 2% down and the credit–but if you do not have a lot of cash reserves, this may be your solution.
Speaking of credit, a credit score of 620 or more is what the underwriters want to see on your score or there are options of acceptable alternative credit which can be explained in detail by a lender. Too see more about getting your credit in order, please review this previous post.
Flexibility with the source of closing costs is another benefit of these loans. There are several Down Payment Assistance Programs available, some being grants and other no interest loans to be paid back to the appropriate source when the home is sold.
To backtrack, a first time home buyer is someone who has not owned a home in the past three years. The Champ program is also used for a primary residences only, either a single family home or a duplex.
Another great first time home buyer’s program is the Northern Communities Land Trust (NCLT). I will be discussing the NCLT in further detail on another post. The Champ Program can be used in conjunction with the Northern Communities Land Trust making home buying quite viable for the first time home buyer.
-I want to thank Andrew Slack of Wells Fargo for providing some of the information used in this post.