By GAY MARSH
Real Estate Broker/Salesman
St. Augustine, Florida

(ST. AUGUSTINE) - Want to buy a home? Does such a thought create butterflies in your stomach? Well, you're not alone. You don't know this person called a Real Estate Agent, you aren't sure you have enough money to do this thing, called "getting a mortgage" . . . and you are going to be asked a lot of personal questions about your finances. Again, you are not alone. People who have bought several homes often feel the same way.

Buying a home helps you reduce your tax burden and allows you to build up equity in your home over the period of time.

But, buying a home can be a freightening process for people who don't have savings, young families just starting out, or anyone who hasn't been able to save (living from paycheck to paycheck).

The biggest hurdle facing most want-to-be homeowners is to come up with the cash for a down payment, which can be tens of thousands of dollars.

For instance, lenders can require a borrower to put a full 20 percent down on the price of their home to "avoid" paying private mortgage insurance. For example, on a $150,000 home, 20 percent would be $30,000. That's enough to discourage many people from going any further. How does a family with three to four children manage to save that?

You can get a loan with less money down, but the smaller the down payment, the more you can expect to pay in interest rates and other associated costs. Add in closing costs (which usually add up to a few thousand more) and many people believe a home is out of their immediate range.

Sandy Bilger, a local loan officer, says there are a lot of ways to purchase your dream with little or no money down, even if your credit report has a little tarnish. With rates hovering around 7 percent (resulting in lower monthly payments) this is a great time to shop around and become a homeowner.

Bilger says today you can get a mortgage loan with no money down. There are several types of loans, for example, The Federal Housing Administration or FHA, offers loans for low to moderate income families. FHA has low down payments, typically 3 percent of the contract price and relatively easier qualifying requirements. You do pay slightly higher mortgage insurance premiums.

There are also Veterans Administration loans with zero-down mortgage programs serving more than 29 million veterans and service personnel in the U.S. Military. There is a cap on closing costs, and the requirement that you purchase private mortgage insurance is eliminated. There is a 2 percent loan-funding fee (which some vets are exempt from) and it may be paid in cash or rolled into the loan.

Florida offers access to down-payment and closing-cost assistance through a partnership between Fannie Mae and the State Housing Finance Corporation.

Bilger adds that if none of the above programs fit your needs it may be time to try Fannie Mae. FNMA began offering a new zero-down loan program last spring for borrowers with good credit. There are no income limits but the maximum purchase price of homes eligible for the "Flexible 100" loan cannot exceed $275,000.

You can also call Fannie Mae at 800-732-6643 to find a lender near you.

Not all lenders are willing to make a loan to someone who doesn't put money down because they may consider a "no-money-down person" too big of a risk. Those that do usually charge a half point to a full percentage point higher in interest to the borrower. Also, your premium mortgage insurance (PMI) that lenders charge when you don't put down at least 20 percent, will be higher.

In Florida the buyer typically pays for the appraisal of the property, the survey, the home inspection, the WDO (wood destroying organism) Inspection, and home owner's warranty (if the seller does not have one). These costs can average about $1,000 and are generally paid for at the time the services are being delivered. Because there are so many different loan programs out there, here's a simple way of looking at closing costs: you can average between 3.5 and 4 percent of the loan amount and be within a good ballpark range of what your closing costs will be. For example, a loan of $150,000. times 3.5 percent will mean closing costs around $5,250. Again, depending on the type of loan, discount points, and origination fees that the lender may charge, this amount can vary.

Don't let this be a scary time in your life, don't bite your nails and lose sleep. This can and should be a fun and memorable time for you as a first-time home buyer. Find a Real Estate Agent who helps you relax, explains things, and keeps your interests foremost in mind.

Gay Marsh, Realtor/Broker, is with Premier Property Realty Group in St. Augustine.