| tart --> | | | | do not foresee, i.e. high heating expenses, |
| 100% financing is a great option for borrowers, | | | | electricity, and inevitable problems. Having some |
| especially when buying your first home. However, | | | | cash reserves will ensure you can withstand some |
| as with any financial consideration, there are | | | | adversity and still keep up on your monthly |
| several pros and cons to consider before closing | | | | payments. |
| on a no down payment home loan. Below are a | | | | Cons |
| few to think about: | | | | 1. Higher Rates |
| Pros | | | | Usually, your lack of down payment will leave you |
| 1. You Can Keep Your Money to Do Work On the | | | | with higher interest rates to cover your lender's |
| House | | | | heightened risk on lending. Shop carefully for your |
| There are likely many things you will want to do | | | | 100% financed mortgage, though, and you should |
| to your home shortly after moving in, such as | | | | find something comfortable for you that will make |
| decorating, painting, or furnishing. You may even | | | | it a wise move. |
| want to do some full-scale remodeling that can | | | | 2. Mandatory Escrow and PMI |
| add up in a hurry. For this reason, it is often | | | | Exceeding 80% Loan-to-Value on conventional |
| better to keep your down payment money | | | | loans will leave you with mandatory monthly |
| instead of incurring more debt to accomplish the | | | | escrow and Private Mortgage Insurance (PMI) |
| aforementioned tasks. | | | | fees. These can raise your monthly payments |
| 2. More Reserves | | | | hundreds of dollars monthly. To avoid these fees, |
| Money in the bank will help you enjoy home | | | | you should investigate breaking your no down |
| ownership, and it will help you to cover the | | | | payment mortgage into two loans. |
| unexpected costs that many new homeowners | | | | |