Recent changes in the mortgage business have made it possible for you to buy a home with no down payment. This means that getting the house of your dreams is now much easier, and you don't have to save for years. It also works for people who are buying their first home. Here are some things you should know about getting a home loan with no money down.
The main goal of zero-down financing is clear: to help you move into your new home faster than before. It's easy to understand how it works: you get a first mortgage and a second mortgage at the same time. Many lenders will only give you a loan if you live in the home full-time. If you are looking for investment properties, you may not be able to get a loan.
Most of the time, the first mortgage will be around 80% (or maybe 75%), so that you don't have to pay for Private Mortgage Insurance. The second mortgage is for the rest of the money, and you can borrow up to 107 percent or even more. Some lenders will even let you borrow the money you need for the closing costs if you have a really good credit score. But if you don't have the credit score you want, some lenders will still give you this kind of loan with a score as low as 580. Of course, they will want to see the right paperwork, and if your credit is better, you can expect a lower interest rate.
When you get a mortgage with no down payment, the interest rate will probably be a little higher than with a more traditional mortgage. Remember that the interest on a second mortgage will always be higher than on a first one. If you can, it's always a good idea to put something down to lower the amount you owe. This could lower both the amount you pay and the amount of interest you pay.
If you want to buy a house with no down payment, you'll probably need at least six months' worth of payments for your PITI (Principal, Interest, Taxes, and Insurance). This shows that there is a certain amount of financial stability.
When you apply for zero-down financing, make sure you know the difference between a fixed-rate mortgage and an adjustable-rate mortgage. Learn the terms that apply to mortgages and the pros and cons of the different kinds. With a second mortgage, you may be able to borrow more than the cost in order to have cash on hand. This could give you a chance to make some changes to get it just the way you want it. But be careful, because if you borrow too much, you might not have any equity for a very long time. Depending on how you use it, you can also write off your second mortgage.
Take your time and look at a few different offers for financing with no money down. Too many people sign contracts only to find out later that it wasn't as good as they thought, leaving them stuck in bad situations. You could save tens of thousands of dollars over the life of a mortgage if you learn about mortgages and deals and take the time to research them.
