100% mortgage financing can help you buy a house with little out of
pocket
expense. So whether you are a first time homebuyer or an investor, you
can
easily purchase a home. But not all zero down mortgages are the same.
So you
need to be careful in compare financing offers and finding terms that
best
meet your budget goals.
Reasons To Pick Zero Down Mortgages
Zero down mortgages are ideal for those renting but who want to get
into a
house with little cash. For the same amount you pay on rent, you can
build
home equity through appreciation and principal payments.
100% mortgage financing is also an option for those looking to buy a
house
as a second property or as an investment. Without tying up a lot of
capital
into a down payment, you can secure financing with reasonable rates.
Difference In Zero Down Mortgage Terms
Lending companies treat “zero down” mortgage terms differently. So it
is
important that you know what kind of contract requirements you are
agreeing
to.
With 100% financing, you are still required to pay for closing costs,
which
can add up to thousands. The advantage to these terms is that you have
a
good idea of the cost of fees. You also have the opportunity to lower
rates
or change terms by paying additional points at the signing.
Loans that require no money at closing are often called 102% mortgages.
Closing costs are still charged, but they become part of the principal.
So
your loan amount is greater than the property’s selling price, up to
5%. You
will also be paying interest on the fees.
Finding The Lowest Costing Financing
It is especially important to look at the APR number when comparing
“zero
down” financing. With this number you can determine the real cost of
the
loan, regardless of when closing costs are paid.
When analyzing costs, take a look at the fine print to determine when
application fees are due. Also consider that you may have to pay
premiums
for PMI if you choose a conventional loan. Subprime lenders waive this
requirement in most cases.
View our recommended
Mortgage Brokers Online.
Carrie Reeder owns ABC Loan Guide, an online resource with information about Mortgage Refinancing
Online and Home Equity Line
of Credit lenders.
