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Can Zero Down Mortgages Work For You?
by Joseph Kenny
Recent trends in 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.
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More About
Joseph Kenny: Joe Kenny writes for NationsFinance.co.uk, offering
comparisons
UK mortgages, or visit OnlyStop.com for some great
bad credit remortgage deals.Visit today:
www.nationsfinance.co.uk |
