Helper loan through my credit union.. what do you guys think?

Butters bank "is joining credit unions across the country to offer the Home Loan Payment Relief loan (HLPR), a home loan program focused specifically on helping lower-income borrowers purchase their first home. This loan's special rates and terms reduce monthly payments so more Members can qualify for a home loan. Nationwide, $1 billion in funding has been committed for making HLPR loans.

The HLPR loan is a 5-year adjustable-rate mortgage with a rate below the national average. At the end of the 5 -year term, the loan becomes a traditional adjustable-rate mortgage with rate adjustments capped at 2% per year, and no more than 6% over the life of the loan.

Members only need to make a very small down payment, and gifts or grants toward the down payment are permitted. The loan is available to borrowers whose household income is either at or below the area median income. Contact our knowledgeable Mortgage Lending Specialists to see if this loan is right for you"

dangerous? help

Most credit unions that offer HLPR loans also have a fixed rate option. This involves a fixed rate with a one percent discount for the first three years. Based on December rates, the current rate is 5.25%, rising to a fixed 6.25% in three years for the rest of the loan. Since interest rates have fallen so far in January, this rate is likely to drop a bit in the next few weeks. Check this out with your credit union.

STAY AWAY ! The first five years will be fine. After that, you are pretty much in the same mess that all these ARM folks are in right now, who are losing their houses to foreclosure.

By the end of year eight, you COULD be paying 6% more interest on the loan (and probably WILL be) than the original rate was at.

I agree with Acermill, stay away. There are great programs that offer small down payment and gifts (FHA, USDA, MyCommunity mortgages, etc) while still offering low Fixed rates.

I would rather use rural housing assistance to buy my first home. You can't buy a home in the "city" but they subsidize your mortgage payment so if your planning on staying for a while it's a good investment!
http://www.rurdev.usda.gov/

A lot people giving advice are also looking to give you a loan (its not advice, its advertising), if they are not local to you and you can鈥檛 get to them within 1 hour don鈥檛 fall for it. They say they are licensed in all 50 states, what does that mean? Which state do you have to look in first if something goes wrong? KEEP IT LOCAL, STAY SAFE.

Remember Buddha's advice:
"Believe nothing, no matter where you read it or who has said it, not even if I have said it, unless it agrees with your own reason and your own common sense." You are the only "expert" you can trust: All brokers, and every other loan officer guru giving advice here with a .com or contact me at the end is "selling" you something (its not advice, its advertising). Don't buy "it."

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