ZERO DOWN LOANS: ENABLING PEOPLE TO MORTGAGE THEIR HOUSES WITHOUT DOWN PAYMENT

2007-06-20 15:49:53

( Financial )



Housing markets throughout the country yielded an increase in home prices that did not equal the average household income. This resulted to people not saving money for a down payment. Down payments are a requirement of mortgage companies aside from the payment of closing costs. Sad to say, this is not a realistic scenario. So now, homebuyers have benefited from zero down mortgage.

HOW DOES THE ZERO DOWN LOAN OPERATE?

Most mortgage companies have realized the difficulty of saving for a down payment. For this reason, some lenders have devised an option that enables you to buy a home with little less money spent. Usually, better rates would be obtained if a down payment had been paid. Because of reduced mortgage rates, a good rate is still possible even without any down payment.

A zero down loan can be obtained in many ways. The first option is an 80/20 loan. In this option, a mortgage equivalent to eighty percent of the asking price is offered and a twenty percent home equity loan is exchanged for the remaining amount. This is an option that may be put to good use; also, homebuyers shy away from private mortgage insurance payments.

The other option provides homebuyers an opportunity to a mortgage loan for one hundred three percent of the asking price. This is also helpful because it gives homebuyers the chance to obtain down payment and at the same time cover a small amount of the closing fee.

FINDING A ZERO DOWN LOAN

If you are planning to purchase a home using the zero down loan, get in touch with a mortgage broker. Options for a zero down loan are packaged in different loan programs. But the willingness to scout for them should be present. If you intend to use a mortgage broker, your company can assist in looking for a lender.

Brokers have various contacts with lending agencies as to what loans they are offering. Passing the standards for a zero down loan will differ depending on the lender. To some lenders, as long as you have good credit and no report of bankruptcy, etc., you can qualify for a zero down loan. Lenders eagerly dangle zero down loans to people with an almost flawless credit. Your cooperation with mortgage brokers is important in realizing your dream of owning a home.


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