Lending Programs and Products

At times the home buying process can seem intimidating and confusing. To find the best product and lender that meets your needs, you need to first educate yourself on the mortgage process. The Washington Homeownership Center was created to assist first-time homebuyers by providing education and referrals to appropriate resources. This web site will provide you with information that will enable you to make more educated decisions. However, if at any time you have questions or would like to speak to an Information & Referral Specialist call us at 866.600.6466.

Choosing a Lender and a Loan

There are many options offered by mortgage lenders. Keep the following in mind while you search for the program that will best serve your needs.

• Choose a Lender - Interview at least 3 lenders to find the one you want to work with. Remember, the lender is working for you so you should feel like an informed partner throughout the entire loan process. Is this someone you can see yourself working with for 1-3 months and someone you can trust to help you make one of the biggest decisions of your life?
• Interest Rate – How much interest does the program charge? Is it close to the market rate? If it’s much higher than the market rate, why?
• Annual Percentage Rate (APR) – The APR is the total cost of a mortgage in terms of a yearly interest rate. The APR total includes the interest rate on the principal of your mortgage, discounts, points, and any fees and costs you will be paying for such as mortgage insurance and closing costs. The APR is a good way to compare loans of different lenders, but make sure you compare like mortgages with like mortgages (15 yr loans w/ other 15 yr loans, etc).
• Fixed vs. Adjustable Rate Mortgages (ARM) – A fixed rate mortgage has an interest rate that stays the same for the duration of the loan term. An ARM has an interest rate that changes in response to the market. There are positives and negatives to both types of programs depending on your circumstances and how long you plan to live in the house you are purchasing.
• Down Payment – How much money does the program require you to put down? Will they allow gifts, grants, or other forms of funding to be used in addition to your own?
• Mortgage Insurance – This is usually required if your down payment was less than 10%, and the cost is determined by how much you put down. Ask how much mortgage insurance will increase your monthly payment?
• Closing Costs – These are a variety of additional fees when it comes time to close your loan (escrow, underwriting, documentation, etc.) that can add up to a few thousand dollars. Your lender should show you exactly what fees make up the closing costs. Will the program allow the seller, gift, and/or grant to contribute to the closing costs? Can they be rolled into the loan? Some programs will even waive many of the closing costs.

Sources for Mortgage Loans Include:

• Banks / Savings and Loans – A traditional source for loans, they usually offer loans specific to their bank and not offered elsewhere (Portfolio Loans), products that will be sold on the secondary market (Conventional Loans), and Government Loans.
• Mortgage Brokers / Companies – Mortgage brokers work as middlemen between the borrower and lenders. As such, they can help you shop around for the best mortgage although it may cost you a bit more to use them.  Some mortgage brokers also cannot offer state bond loan programs.
• Credit Unions – They generally have good terms, fees and interest rates but services are usually offered to members only.
• Sellers – The individual selling the house may finance all or part of the loan. They determine the interest rate, terms, and conditions of the loan.

Introduction to Down Payment Assistance Programs

Down payment funds generally come from the Federal, State, County or City to help first-time, low-income buyers become homeowners. Lending institutions may also have grants or down payment assistance.

How to Apply:
• Read through the list of programs listed in the WHC online Resource Center to find the ones that serve the area in which you wish to purchase.
• Next read all program qualifications. Most down payment assistance programs are for lower to moderate- income borrowers and require that you meet income limits and attend a homebuyer education seminar. Refer to the median income table to find out if you fit the income requirements for available programs.
• Contact the program directly to request detailed information

Contact WHC with any questions you may have.