No Closing Cost Loans - You will have an interest rate that is slightly higher than the rate available for a mortgage loan where you pay closing costs, points, and fees.A "No-closing cost" loan might be suitable if you plan on holding the mortgage note for a short time or if the difference in payment and rate between a "no-closing cost" loan and standard fee loan is minimal.
Even when obtaining a no closing cost loan if you are escrowing for your taxes and insurance, you will still either have to bring money to close to set these up or increase your loan amount and roll this money into the loan to set up your tax and insurance escrows. Therefore, in addition to minor items such as recording fees and such that you may still need to pay for you will have to account for money to set up escrow accounts for your property taxes and homeowners insurance. Depending on the time your taxes and insurance are due this can get somewhat high or be very low.
Keep in mind that "No Closing Costs" is not exactly the same as "No Costs". Depending on the lending banks, some may require the home buyer to pay for appraisal, county recording, mortgage taxes, real estate taxes, pre-paid interests, etc. Always inquire about what specifically are the banks paying on your behalf. A detailed Good Faith Estimate provided by the lending banks can often paint a clearer picture as to what the true costs are.
No closing cost loans are advertised as a mortgage loan with no cost to you. This is only true for the upfront cost. You will be paying those cost at a much higher interest rate which generally will cost you much more over time than if you would have just taken the lower rate with closing costs.
If you are considering a no closing cost option, ask your loan officer about such topics as mortgage insurance & title fees.
Ask your mortgage professional to show you the mathematical equation for how long it would take you to "break even" with a standard loan program that you are comparing to a no closing cost loan. If you save $50 per month on a no closing cost loan that should have $5,000 worth of closing costs, it would take you over 8 years to "break even" by paying the closing costs up front.
You may actually be able to effectively get a no closing cost loan, by getting the closing costs paid for by the seller, with seller paid concessions. If the seller agrees to pay 3% closing costs, you may get the same loan with a small increase in the loan amount, but no increase in the interest rate, providing the appraisal will allow for the increase in price. If you plan to hold on to the property for any length of time, it would be well worth it to raise the price by a few thousand dollars, instead of paying a higher interest rate.
The implication in the advertising of no closing cost loans from some lenders is that the lender is simply “giving away” or not charging for the closing costs. Nothing could be further from the truth. You will pay for these costs in one form or another and an honest, competent mortgage professional such as myself can clear the smoke and mirrors from such advertising.
There is no such thing as a free mortgage. There are people involved with every mortgage transaction. Those people must be paid. If your not paying any closing costs then your paying a higher rate. Often no closing cost loans are contingent on higher rates or the seller gives a credit.
Beware of the lenders that also offer no lender fees or extremely low lender fees. No or low lender fee loans typically have all of the other fees associated with the loan and the upfront savings is very minimal.
100% Financing - Today’s lending market is far more lenient with home loan financing than in times past. The ability to borrower up to 100% of the homes value would have been un-thought of 20 years ago.
If you are looking for 100% financing but do not qualify for it, there are downpayment assistance programs available that can help you purchase your new home. Ask your mortgage professional in North Olmsted, about such programs that may be available to you. These programs are available to people in every credit situation, and are a great tool to get you in your dream home.
For example: FHA requires that you put 3% down to qualify for an FHA mortgage. The grant programs will give you the 3%, as long as the sellers agree to it, and it is written in the offer to purchase. The money does not get paid back from your funds ever, thus achieving 100% financing. for you. This is just one example of how a downpayment assistance program can work for you.
Since real estate values have increased at a much faster pace in recent years, many home buyers find it difficult to save for a downpayment. As a result, 100% financing has become ever more popular. Although more banks are offering an array of 100% financing loan products, home buyers should be realistic and expect to pay higher interest rates on these type of "No Money Down" mortgages.
When you are purchasing a home with 100% financing it is an option to get the home sellers to pay your closing costs. This can make owning a new home a very low cost process.
In 2005, 43% of first time home buyers used 100% financing programs.
100% financing can be obtained by financing 1 loan at 100% of the value of the home or by dividing the loan up into 2 mortgages and financing an 80% 1st mortgage and a 20% 2nd mortgage, which is called an 80/20. An 80/20 in becoming a very popular financing option for people looking to avoid mortgage insurance.
There are even programs that will allow you to finance up to 103% of the purchase price of the new home, the additional 3% is used to help pay for closing costs.
When you are purchasing a home with 100% financing it is an option to get the home sellers to pay your closing costs. This can make owning a new home a very low cost process. Make sure your relator knows that you want seller paid closing cost's when you write your offer to purchase.
In addition to the 100% programs for your primary residence there are now programs that will allow you to purchase a non owner occupied or investment property to 100%.
There are certain qualifications to get 100% financing that your mortgage broker can help you figure out. They are very lenient and there are tons of programs available. If your even considering purchasing a home, contact your broker now dave@gofirstsecurity.com.
Zero down home loan - Zero down mortgage financing is available to many people. It is very possible for a large number of consumers to qualify for a home purchase without putting any money down. This has become a very competetive market for lenders competing for this business and the number of homeowners who obtain loans with no money down is growing each year.
It is important to realise that while it may be the only way a borrower can purchase a home, a zero down mortgage does carry a higher interest rate. Ultimately the borrowers goal should be to refinance when there is enough equity to achieve an 80% Loan to Value (LTV).
One option for high credit score borrowers who have minimal disposable cash is to use a 103% loan. This loan allows you to to borrow up to 3% in addition to the purchase price to help with closing costs. Ask your preferred mortgage professional if you qualify for a 103 LTV program.
Some conforming zero down programs do require you to contribute at least $500 to the purchase. Your earnest money counts as money towards purchase. You may also be required to pay your hazard insurance out of closing so that will be another out of pocket cost. Ask your mortgage broker for details on the programs they offer.
The most common way mortgage brokers structure "Zero Down" financing is to break the loan amount into a first and a second mortgage, with the first mortgage consisting of 80% of the loan amount needed and the second mortgage being 20%.
Zero down mortgages are a great tool to use, even if you have saved up for a downpayment. By choosing the zero down mortgage, your downpayment money can now be used for closing costs associated with the loan, moving expenses, new furniture, or any other expenses that you may have when you move into your new home.
If you cannot afford a down payment for your home, there are many down payment assistance programs and grants that may be able to help you purchase your new home. Often these programs are limited to first time home buyers or those with low income. However, there are often no limitations. Call me at 888-418-4467 and I may be able to find a program that will work for you.
Obtaining a true zero down mortgage is when you will not have to come to closing with any funds of your own. In order to achieve this you will need to either have a no closing cost mortgage which can get expensive, or you can have the sellers pay closing costs. Traditional conforming lenders will generally let the sellers pay up to 3% of your closing costs, while most Alt A and subprime lenders will allow up to 6% in closing costs paid by the seller.
Often times zero down payment programs are available to first time homebuyers. If you need a stated income program you may be able to obtain a stated zero down program with an Alt A or subprime lender.
In 2005, 43% of first time home buyers used zero down programs. You may qualify for one of these programs. Call me now! 888-418-4467
