- 1 Minute | No Hard Credit Check
In this second part, we will be discussing a few more topics that show more information about what’s eligible in the Home Possible program, as well as the differences between Home Possible and Possible Advantage programs. This section will be about the rules regarding cancelling mortgage insurance for these programs and the mortgage terms that are available. Each section will have information for both Home Possible and the Home Possible Advantage programs.
Perks for Home Possible and Home Possible Advantage
An additional perk for borrowers interested in both the Home Possible and Home Possible Advantage programs is how both programs handle Mortgage Insurance. If you remember from a previous blog, loan programs may require Mortgage Insurance, either for a certain length/amount of the loan, or for the entire life of the loan. FHA Programs require Mortgage insurance for the entire life of the loan, for example. These two programs from Freddie Mac both allow for Mortgage Insurance to be cancelled once the loan balance drops below 80% of the Home’s appraised value. This means a lower monthly payment once the borrower no longer has to pay for mortgage insurance, if the mortgage interest rate is fixed for the entire life of the loan. This is one of the bigger reasons why the Home Possible and Home Possible Advantage packages are popular, along with the next section.
- 1 Minute | No Hard Credit Check
Home Possible and Home Possible Advantage Offer Flexibility
Another one of the biggest perks to the Home Possible Program is the mortgage term flexibility. While the Home Possible Advantage has the stable 30-year fixed mortgage, the Home Possible program has several terms that may be better fit for the borrower. The Home Possible program has 15 to 30-year fixed mortgages, along with what is called ARMs, or adjustable-rate mortgages, with 5/1, 5/5, 7/1 and 10/1 adjustable rates. There will be a separate blog that will go into the specifics of these adjustable-rate mortgages, however we will add a quick explanation for these specified adjustable rates. The first number stands for the years that the interest rate on the mortgage will remain fixed. The second number is the interval in which the interest can be changed. So for example, the 5/1 ARMS is where the interest is fixed for the first 5 years, and then each year after that, the interest can either go up or down. The 1 in 5/1 will stand for an interval of 1 year, in which the interest can be changed. The reason why this may be a good fit for borrowers is because the first 5 years may have a lower interest rate than a standard 30 year mortgage. If a borrower is looking to re-finance their home, or maybe even sell their home after that first 5 years, this adjustable rate mortgage may also be a cost-efficient strategy, provided the lender does not have any penalties.
For the last part, we will discuss Income Eligibility, Credit, Residency and Refinance options for both of these programs!
