Jersey 103% Home Loans
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.
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.
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
following are highlights of this loan program:
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
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).
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.
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.
This type of loan is not assumable.
Penalty: Not applicable.
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.
Funds: Not allowed
Scoring: Generally Fannie Mae and Freddie Mac require a
minimum credit score of 620 for owner occupied and second homes.
(Non-Occupant Co-Borrowers): Not allowed.
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.
Insurance: Not required.