Cheaper Home Loans Put Your Dreams on Fast-Forward

Are you stuck in the rental rut? Stop spinning your wheels and start shopping for your own home. Buying a home has never been easier for low-to-moderate income home buyers, thanks to your friends Fannie Mae and Uncle Sam, who are teaming up with mortgage companies and nonprofit organizations to offer low-cost loans. One program even helps to fight crime by offering sweetheart deals to law enforcement officers on homes in the inner cities.

Down payment? What down payment? The CashSaver Plus mortgage is a new, zero down-payment program for home buyers with good credit, sponsored by the National Association of Housing Partnerships (NAHP), a nonprofit organization. The borrower pays only half a percentage of the loan value at closing. NAHP gets lenders involved by promising them a 3 percent payment. That 3 percent reduces the loan-to-value ratio to 97 percent, enough for the loan to qualify for mortgage insurance through GE Capital Mortgage Insurance. In addition, NAHP provides home ownership counseling, credit advice, early intervention, and other services to new homeowners at the local level.

Fannie Mae, the major secondary mortgage company, works with lenders to offer loans with only 3 percent down. Various plans allow family members to gift or loan the funds necessary for the down payment. Check with your local lender.

Seems like Uncle Sam will do just about anything to help first-time home buyers. The Mortgage Credit Certificate, issued by the Housing Finance and Development Corp, reduces your federal tax burden which, in turn, makes more of your income available for monthly mortgage payments. That means you can qualify for a proportionately bigger mortgage loan--and a bigger or better first home! The MCC allows you to take a federal tax credit equal to 15 percent of your annual mortgage interest expense. The amount of your credit depends on the amount of your loan and interest rate. Generally, the program allows for a maximum refund of about $1,200 per year. Once you qualify, you'll have a choice of either: a) lowering the taxes withheld from your paycheck; or b) taking the credit at the end of the year.

In another innovative twist, police and other law enforcement officers can buy homes from the Department of Housing and Urban Development (HUD) at half-price in urban revitalization areas. Called the Officer-Next-Door program, it's designed to help crime-prone areas by encouraging federal, state or municipal law enforcement officers to move into the neighborhood. First Union Mortgage Corp. waives half the origination fee, too. Loan origination fees, or "points," are typically assessed at one to three percent of the loan value, so that's a sizable discount on top of the 50% markdown on the sales price.

Sources used to create this article include writer Deidra Darsa and The Washington Times.