No homebuyer wants to pay more than they need to. Yet, each year thousands of homebuyers miss out on down payment and closing cost assistance.
“You really need someone to guide you through the house hunt and the purchase,” Greg Elmore Area Manager for Fifth Third Mortgage. “This likely will be the biggest investment you make. We think of ourselves not just as mortgage specialists, but partners in the process.”
Elmore shares five of the biggest mistakes consumers make when buying homes, and tips to avoid them:
- Passing up help. There are more than 200 federal, state and local programs to assist consumers to make their down payments or pay their mortgage closing costs. Some programs are only for first-time homebuyers, others could be for veterans. Fifth Third offers its Down Payment Assistance Program, but its mortgage originators also have the ability to search a database of the more than 200 programs to find which work best and which can be combined with Fifth Third’s program to save consumers the most money.
Tip: Make sure to research programs in your region. The easiest way to see if you qualify: Work with your Fifth Third mortgage loan originator to see which programs work for you. “It’s hard to research and navigate programs alone,” Elmore said. “They vary from city to city, and might only be available during certain times of the year. We help you so you don’t leave any money on the table.”
- Believing you make too much money to qualify. Some buyers think assistance programs are only for low-income households. Some programs assist first-time homebuyers no matter their income levels depending on where they purchase a home.
Tip: Look at programs, such as Fifth Third’s Community Reinvestment Mortgage Special which helps pay closing costs on homes purchased in designated low-income areas with loans financed through Fifth Third Mortgage, no matter the consumer’s income.*** It cannot be combined with Fifth Third’s Down Payment Assistance Program. “I didn’t think I could afford a house,” said Gustavo Benedetti, a high school Spanish teacher in Cincinnati. He recently used the Community Reinvestment Mortgage Special to buy his three-bedroom home. “But Fifth Third paid my closing costs, and made sure I have payments I can afford each month.”
- Thinking you don’t have enough money for a down payment. Fifth Third’s Down Payment Assistance Program works with the Freddie Mac Home Possible Advantage Mortgage allowing homebuyers to put down 3 percent. This will allow the majority of borrowers to enter this program with no cash out of pocket for the down payment.
Tip: Work with your mortgage loan originator at Fifth Third to see which programs can help you qualify. “People tell us they can’t afford a house because of the down payment,” Elmore said. “It’s the most common barrier to buying a home. But we find that a buyer needs less money than she thinks to get into a home with a monthly payment that meets her budget.”
- Clinging to outdated ideas on closing timelines. Closing times are lengthening. And that can be a good thing. The Know Before You Owe rule enacted by the Consumer Financial Protection Bureau went into effect, and has extended the timeline on most home closings. The rule created documents that detail how much a buyer will pay for closing costs, how much each monthly payment will be, and how payments or rates could potentially adjust. Any change to these terms must be given to borrowers with three days to review, which is different from the past when changes could be made to the loan before and during closing without a wait.
Tip: “Be patient,” Elmore said. “And know that all of the changes are made to help you better understand the mortgage terms and help you find the best loan for you.”
- Relying on a one-size-fits-all loan. Many homebuyers likely had a 30-year-loan on their last house. But it’s not the default loan anymore. For each purchase, loan originators look at the buyer’s financial situation and goals, and might suggest a loan with a shorter term.
Tip: Work through the financials on several options with your loan originator to see what puts you in the best financial position to meet your family’s goals. “It might be better to get a lower term loan now to build equity, and then move into something bigger in a few years,” Elmore said. “We want what is right for you.”
About the Down Payment Assistance Program
Fifth Third Mortgage introduces its new Down Payment Assistance Program to help consumers purchase homes. The program offers 3 percent of the purchase price in down payment assistance, up to $3,600, for low-income borrowers or those purchasing in a designated low-income area and financed through Fifth Third.* The program is paired with the Freddie Mac Home Possible Advantage Mortgage, a product with a 3 percent down payment and reduced mortgage insurance premiums.** Fifth Third’s program also can be combined with state and local programs to help consumers take advantage of free money for their down payments.
* To be eligible for the down payment assistance of 3%, up to $3,600, the property must be in one of the following eligible states: MI, IN, IL, KY, TN, OH, WV, NC, GA, FL and either located in a Low Income Census Tract or borrower must meet the low income limit threshold based on the qualifying income per FFIEC website. Down payment assistance may be taxable as income and reported to the IRS. Consult your tax advisor.
**Home Possible Advantage is a service mark of Freddie Mac.
***Application fee may be collected during the mortgage process but will be credited back on the day of closing. Property must be in one of the following eligible states: MI, IN, IL, MO, KY, TN, OH, PA, WV, NC, GA, FL and located in a Low Income Census Tract.
Loans subject to credit review and approval. Prices and programs subject to change without notice. Fifth Third Mortgage Company, 5001 Kingsley Drive, Cincinnati, Ohio 45227, an Illinois Residential Mortgage Licensee. Fifth Third Mortgage Company d/b/a Fifth Third Mortgage Company Incorporated and licensed by the New Hampshire Banking Department. Fifth Third Mortgage is the trade name used by Fifth Third Mortgage Company (NMLS #134100) and Fifth Third Mortgage-MI, LLC (NMLS #447141). Fifth Third Bank, Member FDIC. Equal Housing Lender.
About Fifth Third
Fifth Third Bancorp is a diversified financial services company headquartered in Cincinnati, Ohio. The Company has $142 billion in assets and operates 1,241 full-service Banking Centers, including 95 Bank Mart® locations, most open seven days a week, inside select grocery stores and over 2,500 ATMs in Ohio, Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Pennsylvania, Georgia and North Carolina. Fifth Third operates four main businesses: Commercial Banking, Branch Banking, Consumer Lending, and Investment Advisors. Fifth Third also has an 18.3% interest in Vantiv Holding, LLC. Fifth Third is among the largest money managers in the Midwest and, as of March 31, 2016, had $303 billion in assets under care, of which it managed $26 billion for individuals, corporations and not-for-profit organizations. Investor information and press releases can be viewed at www.53.com. Fifth Third’s common stock is traded on the Nasdaq® Global Select Market under the symbol “FITB.” Fifth Third Bank was established in 1858. Member FDIC, Equal Housing Lender