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Susquehanna Bank Homestart Loan: Too good to be true?

Hello. We are in the process of buying a house and are talking to someone at Susquehanna Bank (based in Lancaster, PA) about their Homestart loan program. Basically, it needs 3% down for a 30 year fixed loan at 4% interest and you do not need to pay mortgage insurance as you would with an FHA loan. The requirements are annual salary less than $65,000 and certain maximum ratios of debt and monthly housing payment to your annual salary. This sounds too good to be true since we would save the mortgage insurance cost at closing and the PMI payment every month. Is there a catch or is this a common program?
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February 22 2012 - Lansdale
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Profile picture for AndreaSmolin
I'd suggest talking about this program with another lender in PA, here's our directory of lenders that lender in your area: http://www.zillow.com/directory/PA/mortgage-lenders/
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February 27 2012

This program is legit.  You pay a little bit higher interest rate and no PMI, which is big savings in some cases.
I am a housing counselor at Community Progress Council and have had homebuyers use this program to purchase a home.  They were very happy with the program.

Diane Scott

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August 05 2012
I thought it was to good to be true as well and was hesitant to refer my buyers but after closing a couple of these deals in Philadelphia I can say they have all been delivered as promise.

The income cap here is 96k for this program! It is a great option for buyers who don't have a lot to put down.

The catch is that the interest rate is a bit higher than market.  But not having to pay PMI has made the monthly payments start out lower even with the higher rate on my deals.  You also have to open an bank account with them and I believe you have to do some form of home buyer counseling with them.

This program has made the difference between my buyers getting into a temporary starter home or a home they could see themselves in longer term for the same monthly payment!
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January 09 2013
Great program and there is not trade off.  Listen if your paying PMI on a loan there more than likely was an upfront fee so when you add up all those cost (upfront fee plus monthly) your really paying the higher interest rate anyways.  4% is historically low interest rate people and to only put down 3% is a steal.  When rates are 5.25% people are going to wish they purchased now!   If you can afford the down payment of 3% plus the closing cost than go for it.  Remember to ask the seller for 3% seller assist and you should walk away with a great house and a solid deal. 
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May 28 2013
 
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