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Buying with No Down Payment
Can you make your dreams come true with a zero down payment mortgage? Yes, believe that you can, because it's done every day.
Saving for a down payment should not be a reason to put your dream house on hold. You can buy your dream home with a zero down payment mortgage. In fact, not only will you be able to buy a home sooner, you may be able to buy a bigger and better home if that is what you want. With a zero down payment mortgage, the amount of loan you can afford is determined by your ability to make monthly payments not by the amount of your down payment.
Buying a home is part of the American dream and it is something most of us anticipate for years. Many prospective home buyers might have saved up for a down payment, but just don’t have quite enough to afford their dream home. If that’s your situation, you can breathe easier because there are currently more zero down payment mortgage programs than you can imagine. You don’t have to delay buying a home any longer while you save up your down payment.
The trick is determining which loan program is the best option for you, and that is why you need an experienced loan officer who knows how to explain the differences between them. Bob Roscoe with Mortgage Marketing Associates in Minneapolis, Minnesota, has over 20 years of industry experience and can show you many ways of saving money when buying zero down. Go to Mortgage Marketing Associates to contact Bob.
The most popular zero down method is really getting two mortgages rather than just one. The first mortgage balance will be 80% of the purchase price, and the second mortgage, which is called a piggyback loan because it is taken out simultaneously with the first mortgage, will cover the difference between the purchase price and your down payment. If your down payment is zero, that means that the piggyback is 20% of the purchase price. This 80%-20% mortgage combination is often referred to as an 80/20.
The main purpose of using two mortgages like an 80/20 is to avoid private mortgage insurance (PMI). Lenders usually require you to pay mortgage insurance if your first mortgage is more than 80% of the value of the home. Because that mortgage insurance tended to be rather expensive, home buyers have looked for ways to avoid it. That is why the 80/20 was developed.
Lately, however, the PMI companies have reduced the cost of some mortgage insurance programs to make them competitive with the 80/20. Consequently, it is worth your time to explore the various options available to decide which plan will work best for you. Each mortgage program is geared toward a different financial situation. Their parameters vary depending upon your credit score, your rental history, your debt-to-income (DTI) ratios and other factors in your financial history.
It will also be worthwhile to decide in advance how long you expect to live in your new home, because some zero down programs may have lower monthly payments but will cost more in the long run. Having a reasonable idea of your future plans will help you decide which zero down program is for you.
There are probably several zero down payment options that will fit your financial situation, so start planning for your new home today.
