0 Down Mortgage Allows You To Own A Home

2007-03-08 10:33:40

( Financial )



Whether you are a first time home buyer or have been through the process, purchasing a home can be taxing especially if you have a low income or you lack money for a down payment. But mortgage lenders now offer 0 down mortgage which could be the right package for you. Zero down implies that you spend no money to put down on your home.

You should realize that in zero money down mortgages, your zero down loans will cost more than conventional loans due to the risk. You may have to pay slightly higher interest rates if your closing costs are rolled into the mortgage. But if you have good credit with consistent income and some assets, you can always negotiate for a lower interest rate.

0 down mortgages carry higher mortgage insurance multipliers and their credit requirements are more rigid than those of conventional products. However, when you put zero money down, you can leverage as much as you can. You can own your home with zero down payments while paying relatively low monthly payments (compared to renting a home) and still enjoy the income tax deductions for mortgage interest.

With 0 down mortgage, you don’t own any equity upon purchase of your home. If you decide to sell the house after a few months, you would not gain anything. Even if home prices increase in one year, you will still not reach the break even if your closing costs exceed the amount.

Zero down loans can be attractive at first glance, but you should choose this only if you have few options. If you need to have a certain house at a certain price then there’s no reason not to explore a 0 down mortgage. However, if you can put together money for down payment within a few months, you’re better off demurring on zero down homes.


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