Can Zero Down Mortgages Work For You?
the mortgage industry have now come up with a
way for you to be able to get a home with zero down. This means
that it has now become much easier to get the house of your
dreams and not have to save for years in advance. It also
applies to first-time home buyers, too. Here are some things
you need to know about the zero down financing for your home.
The main purpose of zero down financing is obvious - so you can
get moved in to your new house quicker than before. The way it
works is simple - you basically take out a first and a second
mortgage at the same time. Many lenders will require that you
must make the home your primary place of residence, so it may
not be available if you are looking for investment properties.
Normally the first mortgage will be around 80% (or possibly
75%) in order to avoid the requirement for Private Mortgage
Insurance. Then the second mortgage is for the balance,
allowing you to even go beyond that and get up to 107% or more.
If you have a really good credit score, some lenders will even
allow you to borrow the amount needed for the closing costs.
However, even if you do not have the credit rating you want,
some lenders will even do this type of financing for you even
with a rating as low as about 580. Of course, they will expect
the proper documentation, and you can expect a better interest
rate with better credit levels.
A zero down mortgage for financing your home will probably mean
a little higher interest than a more traditional mortgage.
Remember that a second mortgage will always have higher
interest than a first mortgage, too. If possible, it is always
a good idea to reduce the amount you owe by putting something
down. This could reduce both your payment and your interest
level.
Zero down financing for your new house will most likely require
that you have at least six months worth of payments for your
PITI (Principal, Interest, Taxes, and Insurance). This shows
that there is some financial stability involved.
When you apply for your zero down financing, be sure you know
the difference between fixed rate mortgages and adjustable rate
mortgages. Know the terms that apply to mortgages, as well as
the strengths and weaknesses of the various types. A second
mortgage may give you the option of going even higher than the
cost in order to have some cash on hand. This could allow you
to do some fixing up in order to get it just the way you want.
Be careful here, though, because borrowing too much could mean
having no equity for a very long time. Second mortgages are
also tax-deductible, too, depending on how you use it.
Be sure that you take some time and compare a number of offers
for your zero down financing. Too many people are signing on
the dotted line only to find out that it was not the good deal
they thought, and they end up stuck in a bad situation.
Education and time spent researching mortgages and offers could
help you to save tens of thousands of dollars over the lifetime
of a mortgage.
About The Author: Joe Kenny writes for the UK personal finance
sites http://www.ukpersonalloanstore.co.uk and also
http://www.cardguide.co.uk
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