Zero Down Mortgages: For the Cash Strapped Home Buyer

2007-03-08 10:33:40

( Financial )



FULL FINANCING

Zero down mortgages is a housing loan plan that finances the entire value of the house that you are planning to buy.

Before the introduction of the zero down mortgage plan, all housing loans are considered partial loans because you have to put up a down payment that you have to pay in cash to the real estate company. The rest will then be paid for by your mortgage plan.

The down payment is the reason why some people cannot buy their dream house yet. While these people are gainfully employed and are qualified to take a mortgage, they do not enough cash to pay for the house down payment which can be substantial in amount.

If you are one of those many people who are ready to make a house purchase, but are short on cash to meet the down payment required, take heart. You can still get that dream house through zero down mortgages. This idea was introduced by banks and lending companies to acknowledge that fact that there are a huge number of people who can afford the mortgage but do not have enough savings for the down payment that is standard in most mortgages.

LOOK BEFORE YOU LEAP

Because of this huge market, more and more lending institutions are offering zero down mortgages. However, for your part, you must know the advantages and disadvantages of zero down mortgages before making any commitment.

The main downside of a zero down mortgage is that it requires the borrower to purchase a private mortgage insurance to ensure that your mortgages will be paid should you encounter some financial problems. Private mortgage insurance can be expensive, especially when combined with your other monthly bills.

In light of this, get zero down mortgages only when you have to. If you can hold on for a while and save up for the down payment, then you might be better off doing so.


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