First Time Home
Buyers – How to get a No Money down Home Loan Mortgage
July 8th, 2006
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Real Estate |
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If you are a
looking for a low down payment or no down payment home loan you might
want to check out conventional loans. If you have served in the
military or are currently in the military you could qualify for a VA
loan with no money down along with competitive interest rates.
The Federal
housing Administration (FHA) is another option if you cannot qualify for
the VA loan. An FHA loan may ask for as little as 3 percent down. You
can sometimes obtain a grant to help with the down payment if you are a
low income qualifying applicant. The problem with an FHA loan is that
the loans dollar amount is limited. With housing markets that can
easily exceed most FHA loans this becomes harder to get an FHA loan.
Another option is
to shop for a conventional home loan that will offer a wide selection of
loans with no money down or low down payments. You can expect that the
private mortgage insurance will be added to the monthly payments with
any of these loans.
One conventional
loan with a zero down payment is Freddie Mac. You can even sometimes
get all the closing costs included into the loan amount of up to 3
percent of the loan amount. That means that you can exceed the property
purchase price by 3 percent.
If you want to get
out of paying private mortgage insurance you will need to put 20 percent
down payment. This is an extra cost to having a low or no down payment
mortgage.
A problem with
financing your home along with closing costs is that you have maxed out
the property value and you have no equity in the home. If for some
reason you needed to sell your home in the next couple of years you
could end up still owing money on the loan if the value of the house
dropped. If you can stick with the loan for the long term you will very
likely avoid this pitfall.
If you save up
money first you are able to reduce your monthly payments. The more
money that you have saved the more equity you have and the less interest
you will pay. If have at least 20 percent down, lenders will be more
confident in lending you money and you are not required to keep private
mortgage insurance.
With housing
values that are well into the $300,000 for many markets it becomes
difficult to save a large down payment. It may be necessary to go with
a low down payment or no money down loan.
Nicole Wilson
Best Syndication
Real Estate
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