Home Loans: Zero Down
Financing is a Reality for First Time Homebuyers
July 31st 2006
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No Money Down |
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In the face of rising interest rates, many lenders are now offering 100
percent home loans at near-market rates to conventional borrowers. These
no-down-payment loans are generally targeted toward people with good
credit (typically, FICO scores of 720 and higher) but not a lot of cash.
This is in part because the two agencies that buy many of the loans
lenders make, Fannie Mae and Freddie Mac, have shown willingness during
the past couple of years to purchase mortgages with less money down than
ever before. "We've been buying lower and lower down payment mortgages
and we will buy 3 percent down mortgages at this time," Fannie Mae
spokesman Clyde Ensslin points out.
To avoid private mortgage insurance (PMI) you can get zero down
financing through a combination of a first and second mortgage,
sometimes referred to as a piggyback loan, or by how the mortgages are
split up (e.g., 80/20--80% first mortgage and 20% second mortgage), as
long as the property is owner-occupied and if the borrower's debt ratio
is 45% or less, and other requirements.
There are other down-payment assistance programs for first-time home
buyers offered by the Federal Housing Authority (FHA), the Department of
Housing and Development (HUD) and other state and federal government
agencies. Minorities and low-income families may be eligible for the
American Dream Down Payment Initiative (ADDI), passed in 2003. ADDI
allows eligible first-time home buyers to receive as much as $10,000 in
down payment assistance. State housing departments and redevelopment
agencies also offer grants and other assistance for first-time home
buyers. Check your phone book or find them on the Internet.
Like other mortgages, zero down loans come in a variety of flavors,
including adjustable rate mortgages (ARMs), which are variable interest
rate loans, fixed interest rate loans, stated income and even
interest-only loans. The best one to choose depends on your
circumstances.
For example, if your credit isn't that good, you may want to consider an
ARM or interest-only loan then refinance once your credit scores
improve. 100% loan programs are for home purchase loans only. You can't
get one for a mortgage refinance. A home equity loan--home equity
installment loan (HEIL) or home equity line of credit (HELOC)--taken out
after securing the first mortgage also doesn't qualify under these
programs.
Mary Ni
Mary is a
highly regarded writer who has published many helpful articles about
home mortgage loans. To learn more about home mortgages, and 1% negative
amortization loans, go to
Bad Credit Second Mortgages please visit the mortgage resource
center at Mortgage
Refinance Loan Outlet. If you need more expert advice from the
nation’s leading loan officers go to
Home Equity Loans Quotes.
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