Carolina 103% Home Mortgage Loans
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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
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.
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 is sold.
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 qualify.
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
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.