| Several home finance choices are offered to first | | | | Even though sizeable down payments are no |
| time home buyers. Real estate experts have | | | | longer a requirement, lenders approve "no money |
| predicted an upcoming market cool down, wherein | | | | down" mortgages with forethought. Many lenders |
| many people will be able to purchase their first | | | | assert that borrowers without cash for a down |
| real estate property. The home buying process | | | | payment are risky applicants because their |
| has many phases. Aside from choosing the | | | | powerlessness to generate a cash reserve |
| perfect home and picking an agent, buyers must | | | | demonstrates poor money management. For this |
| get approved for a mortgage loan. | | | | reason, "no money down" loans applicants are |
| There are several different loan programs | | | | scrutinized. |
| available. Traditional home loans have 80% | | | | To meet the requirements for a zero down |
| loan-to-value. In other words, the broker or lender | | | | home loan, borrowers must have satisfactory |
| will approve the borrower for 80 percent of the | | | | credit. A few lenders adhere to firm guidelines and |
| purchase price. If the property's sale price is | | | | will not approve a loan request if the applicant' |
| $100,000, the lender will finance $80,000, and the | | | | credit report exposes any late or missed |
| borrower is required to provide a down payment | | | | payments within the past twelve months. |
| of $20,000. | | | | Disadvantages of "No Money Down" Loans |
| Before rapid property appreciations, a 20% down | | | | Upfront investments with "no money down" loans |
| payment was somewhat reasonable and | | | | are little or none. This may give the impression of |
| attainable. Quite the opposite exists today. Some | | | | a terrific deal - but there's a catch. Mortgage |
| mortgage lenders carry on the old tradition and | | | | lenders accept a gamble with each "zero down" |
| require down payments from every applicant. On | | | | home loan. As a result, borrowers are charged |
| the other hand, a large number of brokers and | | | | additional fees. Fees such as private mortgage |
| lenders altered the lending criteria, and started | | | | insurance and a higher rate will increase the |
| offering 100% financing. Loan programs such as | | | | mortgage. To lower the rate, borrowers should |
| the Fannie Flex 100 requires zero down, and | | | | deposit a small down payment. It doesn't have to |
| borrowers only need to contribute $500 of their | | | | be the entire 20%. Mortgage lenders accept |
| own funds at closing. | | | | monies borrowed from family, friends, life |
| Which Applicants Qualify for 100% Financing? | | | | insurance policies, and retirement funds. |