Zero Down Payment Mortgage Loans

The days of most home owners putting ten percent down on a 30 year mortgage are long gone. One new option is zero down payment mortgage loans.



Zero Down Payment Mortgage Loans



Whenever you are looking for a loan, there are some good principles to remember. First of all, the more money you can put down on a home, the less your interest rate will be and the better deal you will get. Secondly, never settle for the first offer you get, always shop around and compare different offers. Those principles considered, there is a form of loan that may contradict them but still has its purpose: the zero down payment mortgage loans.



Zero down payment mortgage loans are just as they sound, they allow you to mortgage your home with a lender without having to put any money down on the loan itself. What you should know about this, first of all, is that it is violating the above principles and that this form of loan should be sought as a last resort. By restricting yourself to a zero down payment mortgage loan, you are restricting the offers you can get from lenders, since at that point most lenders will offer you the same exact deal. Also, putting no money down will lead to much higher interest rates then you would be paying otherwise.



That being said, zero down payment mortgage loans still serve their purpose. These loans, because they require no down payment, are good for those who have difficulty coming up with the cash savings required for a down payment on a home purchase. This loan can be useful in times when the market is at a low and starting to rise, since the value of the home will rise after the loan has been taken out, and the loan can be used in these cases since if the person receiving the loan waits, the market prices of home could rise considerably over that time. But remember, whenever you use a no down payment mortgage loan, the bank owns complete equity of the home and these leaves you no leverage for receiving loans against your equity. You will only earn equity as you pay off the home and as the value of the home rises.



At first glance, zero down payment loans sound like a great deal. In truth, they should be used as a last resort given the fact you will pay significantly more in interest over the length of the loan. At the end of the day, however, owning a home is better than not owning one, so these loans certainly have their place in the market.






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Zero Down Mortgage Loans - First Time Home Buyer Loan Programs

Because of a larger variety of mortgage loans available, first time home buyers may become easily overwhelmed with the home buying process. Understandably, those entering the housing market may not know which loan program best fits their needs. Working with a mortgage broker is helpful. They can guide you through the entire process and help you select a loan with the least out-of-pocket expense.



Main Setback of Purchasing a New Home



Buying a first home is an American dream. The home buying process involves paying out-of-pocket cash for down payments and closing costs. Unfortunately, many families are unable to achieve this dream because of having a small cash reserve.



Years ago, families would have to postpone buying a home until they had acquired adequate funds. Because of rising home prices, many families can no longer afford to wait. Thus, several first time home buyers are taking advantage of zero down mortgage loans.



How Do Zero Down Mortgage Loans Work?



There are many different types of mortgage lenders. Some lenders will only finance 80, 90, or 95 percent of the home price. Thus, homebuyers would need a down payment for the remaining percentage. With a zero down home loan, the lender offers 100% financing.



Zero down mortgage loans make the goal of purchasing a new home reachable. Even if a homebuyer cannot afford to pay their own closing fees, a mortgage broker should be able to locate zero down mortgage loans that offer 103% or 107 % loans. The majority of lenders require a high credit rating for the latter choices.



Options Available to First Time Home Buyers



First time home buyer loans offer unique financing, and most loans are tailored to individuals needs. Getting a home loan does not require good credit. In fact, several lenders are eager to offer first time home buyer loans to those with bad credit or past bankruptcy.



Home buyers can choose from several loan terms: 15-year, 20-year, 30-year, or 40-year. Lenders offer a variety of loan options, which create affordable living. Because of low interest rates, buyers can take advantage of a low fixed rate. Furthermore, there is also the popular interest-only mortgage option for those buying homes in overpriced markets.






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Zero Down Mortgage - Tips On Getting Approved

Zero down home financing is about getting rid of the obstacle of closing costs. You can trade in your rent payment for a house payment without paying thousands at closing. Before you start enjoying the benefits of home ownership, make sure you follow these tips to get approved for the best rates.



Check Your Credit Report



Annually checking your credit report is a good idea, especially if you are applying for new credit. Make sure that all your information is correct. If there are mistakes, get them fixed. Otherwise, you could be paying thousands in interest charges.



While looking at your accounts, keep your debt to a minimum. A high debt to income ratio can disqualify your for a zero down loan. Also make sure the debt you do have is spread over multiple accounts rather than maxing out one account.



Increase Your Cash Reserves



Cash reserves settle lenders nerves. So you might consider liquidating stocks or other assets when applying for a mortgage. At a minimum, lenders like to see at least two months worth of payments as liquid assets. You do have the option of reinvesting those funds after the loan has been completed.



Look For The Right Lender



Not all lenders will look at your application in the same way. Each company has their own lending criteria. So start your search by requesting loan estimates from several financial institutions. You can start with a mortgage broker site or go directly to the lender.



There are several definitions of zero down home financing. It could mean no down payment or a rolled in closing costs. There are even home loans with no closing costs. Check loan quotes and their fine print to find the financing that best meets your financial goals.



Always Other Options



There are other options to avoid a down payment. One option is to get two mortgages to finance your homes purchase. The other option is to put money down, but then turn around and take out a home equity loan. This option usually helps you avoid paying PMI.



Dont rush into any mortgage. Research the numbers and choose what works best for you and your budget.






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Zero Down Home Financing - No Money Down Mortgage Loans

Zero down home financing helps you buy a house with little out of pocket expense. Instead of depositing $60,000 to $20,000 to get in your home, the most you will pay are closing costs of a few thousands. No money down can also help you buy a vacation home without completely depleting your investments.



When To Pick A No Money Down Mortgage



A no money down mortgage is a viable option for many people. For one, you can get into a house for about the cost of rent. You can hold onto your cash for moving expenses rather than a large down payment. For those looking to buy a vacation home, zero down helps you keep your assets liquid, not needlessly tying them up in a property.



Choosing Your Zero Down Mortgage Loan



Zero down mortgage loans come with two different terms. The most common zero down mortgage finances just 100% of the homes price. All closing costs and application fees are still required.



The other zero down mortgage includes fees with the loan up to 3% or 5%. Since the principal is over the homes value, these types of loans are harder to qualify for. In most cases, you need an excellent credit score and cash reserves.



Skipping PMI With No Money Down



One of the hurdles of a no money down home loan is the additional cost of private mortgage insurance (PMI). Most conventional loans require you to carry this insurance until you reach 20% equity either through appreciation or payments on the loans principal.



You can avoid this expense by piggy backing your loans. By taking out two mortgages, one for 80% and the other for 20%, you dont have to pay premiums. The same lender can carry both loans, or you can choose different lenders.



Finding The Right Lender



To find a lender who offers zero down financing, start by asking for loan quotes for no money down mortgages. With most online sites, you will get a response in minutes on rates and terms. If you have trouble qualifying with a conventional lender, turn to a subprime lender. They offer more creative terms.






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Your Mortgage Application May Trigger Competing Offers

If you apply for a mortgage, your inbox, answering machine, and mailbox may fill up quickly with competing offers from other mortgage companies. Its not that the company you applied to is selling or sharing your information. Rather, its that creditors including mortgage companies are taking advantage of a federal law that allows them to identify potential customers for the products they offer, and then market to them. The Federal Trade Commission, the nations consumer protection agency, wants you to know why your application for a mortgage may trigger competing offers, how you can use them to your benefit, and how to stop getting them if thats your choice.



The unsolicited calls, emails, and letters about competing offers often are called prescreened or pre-approved offers of credit. They are based on information in your credit report that suggests you meet criteria set by the creditor making the offer for example, you live in a certain zip code, you have a certain number of credit cards, or you have a certain credit score. Credit bureaus and other consumer reporting companies sell lists of consumers who meet the criteria to insurance companies, lenders, and other creditors.



When you apply for a mortgage, the lender usually gets a copy of your credit report. At that point, an inquiry appears on your report showing that the lender has looked at it. The inquiry indicates youre in the market for a loan. Thats why mortgage companies buy lists of consumers who have a recent inquiry from a mortgage company on their credit report. Federal law allows this practice if the offer of credit meets certain legal requirements.



Clearly, some mortgage companies benefit from the practice. Consumers can benefit, too: prescreened offers can highlight other available products and make it easier to compare costs while you carefully check out the terms and conditions of any offers you might consider.



Still, some people may prefer not to receive prescreened offers of credit and insurance at all. Heres how to stop them:



Call 1-888-5-OPTOUT (1-888-567-8688) and you will be asked to provide certain personal information, including your home telephone number, name, Social Security number, and date of birth. The information you provide is confidential, and will be used only to process your request to opt out.



Opting out of prescreened offers does not affect your ability to apply for credit or to get it. Your opt out request will be processed within five days, but it may take up to 60 days before the prescreened offers stop coming. If you have a joint mortgage, both parties need to opt out to stop the prescreened offers. If or when you want to opt back in, use the same telephone number.





Put your phone number on the federal governments National Do Not Call Registry to reduce the telemarketing calls you get at home. To register your phone number or to get information about the registry call 1-888-382-1222 from the phone number you want to register. You will get fewer telemarketing calls within 31 days of registering your number. Your number stays on the registry for five years, until it is disconnected, or until you take it off the registry.



Many companies use other tools to identify marketing prospects, and that the Do Not Call Registry wont shield you from all telemarketers for example, those with which you have a business relationship. Even if you opt out of prescreened offers and put your number on the National Do Not Call Registry, you can expect some unsolicited offers.






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You Might Still Want to Refinance

Even though rates are on the rise, that doesn't mean you shouldn't refinance.



Practically everyone has refinanced or thought about it at one point in time. We've seen the dozens of commercials that urge us to do it. With rates at record lows over the past few years, refinancing has helped many borrowers lower their monthly payments.



But rates are now on the rise. Refinancing applications have fallen slightly. Most people don't think you should refinance when rates are going up. However, many refinancings are "cash-out" refinancing. That means that equity is handed over to the homeowner in return for a larger mortgage. Many people need that cash.



Some people are refinancing their homes for a "cash-out" because they have a significant home-equity line of credit balance. This line of credit has an adjustable-interest rate, which is going up on them. They refinance it in with their first mortgage at a fixed rate. They aren't eliminating the debt, just fixing the interest rate and monthly payment. If you don't need the revolving line of credit, you should probably take advantage of the fixed rate.



There are many homeowners that piggyback their mortgages when they are buying. They end up with one mortgage for 80% of the value of the home and a second mortgage for 10%. They put the remaining 10% down on the home. Since the first mortgage is only for 80% of the purchase price, they avoid having to pay PMI.



Many piggybackers have a line of credit as the second loan. Others simply want to consolidate into one loan that would be easier to keep track of. Either way, refinancing into a fixed-rate isn't a bad idea. And one payment is easier to make on time each month than two.



Those out there with adjustable-rate mortgages are starting to get a little nervous. Interest rates have been rising pretty fast. The gap between the rate of a adjustable mortgage and a fixed mortgage has narrowed so much that you really don't save much by taking the adjustable mortgage. Many are looking to avoid rising interest rates by financing to fixed-rate mortgages.



Refinancing can be a good thing. You can get a fixed rate to counter the rising interest rates. You can use cash from a refinancing to consolidate your debt. You can improve your home. But you should be careful about taking too much equity out of your home.



Many advisors warn consumers not to use their homes as personal piggy banks. If home prices decline, you could owe more than your house would sell for. In a cooling, or slowing, real estate market, you do not want to be maxed out on the equity in your home. If something happened and you had to sell, you want to walk away from the closing table with money, not have to go to it with a check. Paying to sell your home isn't how you want to do it.



Fixed-rate mortgages are always a good and solid financial choice. Anytime you are looking to refinance, your best option is to go with the shortest-term, fixed-rate mortgage you can afford.






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Why Using A Mortgage Broker Can Save You Money

Being able to get the house you want should make you happy as a lark. But what if, after you move in, you find out that you may have been able to get a much better financial deal than what you got? Would you still be as happy as a lark? It is quite possible to get the best deal in the first place by using a mortgage broker. Here is how a mortgage broker can save you some money.



It needs to be stated from the start that a mortgage broker will not always be able to get you the best deal, but could, probably, in most cases. So many people, however - too many people, in fact, are still accepting the first offer they are given for their mortgage. Getting that good deal, however, takes more than just comparing loans.



A bank lender will only be able to offer mortgage products that their own bank creates. These products, of differing values, are limited. Sometimes a lending agent may not want to compare the different products his or her bank offers in order to find an exact match for your needs. At other times, a bank agent will work very hard for you.



A mortgage broker, however, only gets paid when a sale is made - in other words - when a mortgage is signed. This means that it is in their best interests to get for you a highly competitive deal. They deal with many different lending companies on a regular basis and know what each of them are willing to do - in the very recent past. When you contact a mortgage broker, there often will not be any fees. They will then get your information from you and send it to several companies that they think will give you a very competitive offer.



Another benefit comes from the way that they perform their services. A banker will give you a more institutionalized service, and your interaction with him or her will be more formal. A mortgage broker, however, will be glad to take more personal time with you, making you feel more welcome and will probably spend more time with you and for you. In fact, he or she may even come to your house.



Mortgage brokers have access to mortgages at a slightly less price than a banker might provide. This is because they deal with wholesale prices rather than the retail. Their service offered to lenders means a savings for the lender because the lender does not need to maintain sales staff except when a sale is made.



Even when there may be a problem with your credit, the value of a mortgage broker can really be seen. Because they know many different lenders and each of their specialties, they can work to find lenders that can give you a great deal. They would already know which lenders regularly give money to those with bad credit or whatever special need you may have. A bank representative, however, while still able to offer a number of products, is limited to only what their branch offers and the special deals they give.






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