In many housing markets across the country, the increase in home prices
does not match the average household income. Hence, many people are
unable to save money for a down payment. Ideally, mortgage companies
prefer applicants to have a down payment of at least 5%, in addition to
paying closing costs. Unfortunately, this is an unrealistic expectation.
Thus, many homebuyers are taking advantage of zero down mortgage loans.
How Do Zero Down Loans Works?
Fortunately, many mortgage companies recognize how difficult it is to
save for a down payment. Thus, some lenders have created special loan
programs that make it possible to buy a home with little out-of-pocket
expense. Ordinarily, if you had a down payment for a home, you would
obtain better rates. However, because of low mortgage rates, you do not
need a down payment to secure a good rate.
There are many options for a zero down home loan. For starters, some
mortgage lenders offer an 80/20 loan. This involves offering a mortgage
for 80% of the asking price, and a 20% home equity loan for the
remaining balance. This option is very useful; moreover, homebuyers avoid
paying private mortgage insurance.
Additionally, homebuyers may obtain a mortgage loan for 103% of the
asking price. This is beneficial because it allows new homebuyers to
afford down payment and a portion of the closing fees.
How to Find a No Money Down Mortgage Loan?
If you are hoping to buy a home with zero down, contact a mortgage
broker. There are various loan programs that offer zero down loan options.
However, you must be willing to look for them. If using a mortgage
broker, the company can help you find a lender.
Brokers have access to loans offered by private lenders, government
programs, sub prime lenders, etc. Meeting the qualification for a zero
down mortgage will vary according to lenders. Some lenders require good
credit, no bankruptcies, etc. Meanwhile, other lenders are eager to offer
no money down loans to people with less than perfect credit. Working
with a mortgage broker can make your dreams of homeownership a reality.
View our recommended
Mortgage Brokers Online.
Carrie Reeder owns ABC Loan Guide, an online resource with information about Mortgage Refinancing
Online and Home Equity Line
of Credit lenders.