28 Aug 100 financing, 100% financing, 100 mortgage financing, 0 down home loan, 0 down mortgage
How to get 100% mortgage financing
Most people don’t know about 100% mortgage financing so they keep renting because they think that they need a 10, 15 or 20% down payment to buy a home. With an average home running $200,000 these days, the though of coming up with $20,000 plus closing costs and insurance is enough to keep anyone in an apartment. The truth is you can get 100% mortgage financing and end up buying a home with zero down! You see, mortgage lenders realize that it’s hard for first time buyers to come up with the cash that a traditional mortgage requires. That’s why they invented the 100% mortgage financing option. Not every bank or lending company offers 100% mortgage financing but it’s pretty easy to find those that do. Here’s how it works: When you apply for 100% mortgage financing you are asking for what lenders call a “piggyback” or 80/20 loan. What a 100% mortgage financing loan really is amounts to receiving a first and a second mortgage at the same time. The first mortgage covers 80% of the home’s selling price while the second mortgage covers the remaining 20%. When you add them up you’ve got 100% mortgage financing! There are 3 benefits to 100% mortgage financing. The first one is pretty obvious. Whatever money you had in your savings account before you bought your home, you’ll still have in your savings account after you close. With 100% mortgage financing you don’t need to touch any of your own money. The second benefit is that you won’t be required to buy PMI (Private Mortgage Insurance), which is a type of insurance that a lender requires when your down payment does not equal at least 20% of the mortgaged amount. With 100% mortgage financing, the first 80% is covered by the first mortgage, and the remaining 20%, which is the amount that the buyer usually puts down to avoid paying PMI, is covered by the second mortgage. The third benefit is the fact that the payments for the second mortgage that you take out under the 100% mortgage financing agreement may be tax deductible while PMI is never tax deductible. You might think that accepting 100% mortgage financing will mean that you’re going to get socked with high interest rates. Not true! If you have good credit, and acceptable FICO scores, your mortgage interest rate for 100% mortgage financing should be right in line with rates for conventional mortgages and conventional second mortgages. The only real difference between a conventional mortgage and 100% mortgage financing is you get to keep the money that you would normally put down. Even if that doesn’t work out to be true in your particular case, 100% mortgage financing mortgages usually always work out to be cheaper than combined cost of a conventional mortgage where the buyer has put less than 20% down plus the additional expense of PMI. There are good points and some not so good points to consider before you apply for 100% mortgage financing. Of course, the obvious good side is that you can buy a home with no money down. After all, that’s what 100% mortgage financing means. If you opt for an interest-only payment plan, you can also get your payments down to the smallest amount possible. That actually makes 100% mortgage financing a double win. The major downside of 100% mortgage financing comes into play if your house should lose substantial value in the future. You may end up being “upside down” on your mortgage which means that you owe more than the house is actually worth. There is no stigma or reflection on your personal credit when you apply for 100% mortgage financing, so why spend all of your money just to buy a home. Get 100% mortgage financing and use that money for something else!
the criteria is very easy. Your middle credit score must be above 580 and have two trade lines (credit card, student loan, car loan or any other cards or payment that shows your credit report) open for at least 12 months. Discharged chapter 7 more than 6 months ago is ok. No foreclosures within last three years and no collection within last two years.
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