Types of Loans that effect Sellers:

FHA loans or HUD (Housing and Urban Development) loans are designed for first time homebuyers and allow the buyer to invest in a home with very little money down. If the buyer rolls the closing costs into the transaction, they can get their down payment money gifted to them from a relative. There is also grant money to help with down payment assistance for those who qualify. FHA loans are government loans that also allow the buyer to have a higher debt to income ratio than they can have with a conventional loan. FHA loans typically need at least 3% of the purchase price as a down payment at closing.

VA loans are guaranteed loans by the Department of Veterans. This allows our military friends to purchase a home with $0 down. VA loans can be used by active members of the armed forces or reserves or their spouses.

If a buyer doesn't qualify for FHA Grant money, doesn't have 3% and hasn't served in the armed forces, he/she can get a conventional 80/20 loan. The conventional 80/20 is a loan that will allow a buyer to get a home for $0 down. Usually with this loan, there are higher closing costs and interest rates. The reason why the loan companies like to use 80/20 is because it escapes mortgage insurance. Mortgage insurance is an insurance policy that the mortgage company makes the buyer purchase to ensure they will not default on the loan.

Most of the time with these programs, the only thing you have to be concerned with is the appraisal. An approval is only as good as the person writing the letter. There are certain areas in the purchase agreement that ensures the buyer has the loan. MN Real Estate Network, Inc. makes sure all of our sellers are protected from faulty loans. Contact us to find out how we can protect you from a night mare transaction.