105% LTV Mortgage Loans

[Luke Ache]

Hi all. I have been looking at some credit unions here in the HSV area that may offer some better terms financing than big banks and Redstone seems to be a good option-they have an agreement with my current employer, so I am leaning towards opening a personal and a business account with them.

It seems like they have a 105% LTV loan option- I used to do mortgages back in the day and I don't remember this product at all- the interest rates are high obviously but if you are looking to refinance to cash out in a few years, it may not be a bad option.

Is this essentially a "no money down" type of loan meaning the down payment, closing costs and points are already rolled into the loan? Or is this a first mortgage backed by a high interest second mortgage? I am trying to understand how this may work. 

[Anastasia G.]

Hello @Luke Ache FHA, Home Ready, Home Possible do allow LTV to go above 100%, there programs allow we call it "secondary financing", which simply means you are allowed to use down payment assistance programs for down payment and/or closings costs (DPA); Each DPA is very unique. There are 4 main types of DPAs:

• ✅ Repayable second mortgages - must be paid down with the main mortgage loan
• ✅ Deferred second mortgages - postponed repayment until the sale/refi/move out
• ✅ Forgivable second mortgages - some or all is forgiven over a set number of years
• ✅ Grants - aka gifts, never to be repaid

If you find a program, you would need to make sure that financial institution is on the list of approved lenders for that program. In New Jersey we have access to 100+ DPA programs. State HMFA programs are typically very good. Here is a link to Alabama: https://www.ahfa.com/homebuyer...