Is Flagstar Bank Playing Low-Income Borrowers For Chumps?
Is Flagstar Bank Playing Low-Income Borrowers For Chumps?
You could find yourself trapped in the 100 Percent financing program by Flagstar Bank
Michigan based Flagstar Bank has the Internet abuzz about their plan to bring back zero-down mortgages.
Flagstar Bank is also throwing in money toward closing costs. The bank is gifting the 3% required down payment. They are also contributing up to $3,500 toward closing costs to qualified borrowers.
Borrowers would not have to repay the down payment or closing costs. Flagstar Bank will be giving the borrower a 1099 form to report as income to the IRS.
The bank says they see a need in many communities to help people who lack the funds for a down payment. Flagstar is also targeting Millennials living in urban areas with student loan debt. Student loan debt payments hinder their ability to save for a down payment.
Flagstar Bank says qualified borrowers would need an annual income of $35,000 to $62,000. The sales price of the home would tend to be in the range of $80,000 to $175,000. The property must also be in a qualified county.
Flagstar Bank is only offering this program for homes in 18 counties in Michigan. Homes that qualify must be in low-to-moderate income census tracts.
The mortgage rate would depend on the credit score of the borrower but could range around 4% to 4.6%.
Borrowers in the Flagstar Bank program cannot currently own a home or have owned a home in the last three years.
A borrower must prove they have income from a job or benefits. Homebuyer education is a requirement.
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