Your First Home Might Be Closer Than You Think!

Are you looking to purchase your first home but think you don’t have enough money for the down payment? Or maybe you’re concerned that you won’t qualify for a mortgage because of your annual income? Or maybe you’re just avoiding the topic because you’re afraid the process is too confusing. These are all valid concerns. Fortunately, there are several programs available to help prospective first-time mortgage borrowers transition to the rewarding world of home ownership.

In this article, we’re going to focus on two programs aimed at assisting low to moderate income families achieve home ownership. Both of these programs are offered at CrossFirst Bank, and our experienced Mortgage Bankers can walk you through the process:

  • HomeReady Mortgage
  • Home Possible® Mortgage

Let’s define some common mortgage phrases in the mortgage process, and see how they relate to the HomeReady Mortgage and Home Possible Mortgage programs at CrossFirst Bank.

Equity

Equity is the dollar value of a property after any debt you owe on it is subtracted. For example, if your house is valued at $250,000 and you owe $100,000 on your mortgage – your equity value is $150,000. You’d receive $150,000 in proceeds after you sold your house and paid off your mortgage.

Loan To Value (LTV) Ratio

Another important phrase to understand when you’re purchasing a home is loan-to-value (LTV) ratio. This is the percentage of the property’s value that you’ll be financing (borrowing) versus how much cash you’ll be putting down up front. A lot of traditional mortgage programs require at least a 20% down payment, which means your LTV ratio is 80%. But coming up with a 20% down payment can be a huge challenge for first-time homebuyers. For example, 20% of a $250,000 home is $50,000. Fortunately, programs available at CrossFirst Bank like HomeReady Mortgage and Home Possible Mortgage allow up to a 97% LTV ratio, meaning you’ll only need to put down 3%. Also, both programs allow flexible funding sources for your down payment. This means that the down payment doesn’t have to come directly from you. It could be a gift from a family member or other source.

Mortgage Insurance (MI)

It’s important to know that most traditional mortgage programs will require you (the borrower) to pay a monthly Mortgage Insurance (MI) premium while your LTV ratio is still over 80%. The reason they require MI is because when a lender finances a property, they are taking a calculated risk that you’ll repay them. The higher amount financed with less cash put down, the higher the risk to the lender if the borrower were to default on the loan. The MI helps cover that extra risk taken on by the lender. Both the HomeReady Mortgage and Home Possible Mortgage programs at CrossFirst Bank may require MI, but the requirements vary by program. You may not have to pay MI if your LTV ratio is above 80%, and/or if you do have to pay MI, it may be more affordable and more easily cancelable than a traditional mortgage program. Reach out to one of our experienced Mortgage Bankers to learn more about your MI options.

Home Ownership Education Requirement

Both the HomeReady Mortgage and Home Possible Mortgage programs from CrossFirst Bank do require completion of a home ownership education course if all of the borrowers on the mortgage loan are first-time homebuyers. Don’t worry! There are thousands of approved housing counseling agencies all across the United States. In these sessions, first-time homebuyers learn valuable information about:

  • How to calculate how much home you can afford
  • Down payment calculations
  • The mortgage process
  • Budgeting
  • What to expect at closing
  • More

One of our expert Mortgage Bankers can go over the requirements, and get you connected with the closest counselling agency.

Income Threshold Requirement

Both the HomeReady Mortgage and Home Possible Mortgage programs are intended for low to moderate income families. Your family’s income must be less than 80% of your location’s Area Median Income (AMI). To see what the AMI is in your area, use this easy online tool. It will tell you what the AMI is in your area, and it will list the maximum family income limit to qualify.

Ready to Apply?

The reality of home ownership might be closer than you think! With programs like HomeReady Mortgage and Home Possible Mortgage at CrossFirst Bank, common barriers like down payments and mortgage insurance are more manageable with programs like these. Reach out to one our Mortgage Bankers today to ask questions or get the application process started. At CrossFirst Bank, we pride ourselves on providing extraordinary service. Our bankers will walk you through each step of the mortgage process and help identify the best program for your needs.