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Mortgage News...
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The Zero Down Mortgage is designed to offer home
ownership opportunities to individuals with fair credit, but who lack the ability or desire to make a down payment on a home. It also provides an option for those who wish to invest their savings in assets other than their home. The fixed rate and adjustable rate (ARM) mortgages are available for purchase, construction, or purchase/ home improvement of an owner occupied primary residence... and in some cases, with the right credit, non-owner occupied properties are eligible as well. While not required to make a down payment, you may need to (but not always) have up to 2% in the transaction. These funds are applied toward your closing costs and may come from your own funds, a gift from a relative, grant, or sale of assets you own. |
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Zero Down Mortgage Loans
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A zero-down loan allows a buyer to purchase a home without
committing any money as a down payment. Thus, if you buy a house for $200,000, your mortgage will be for $200,000. However, you will usually need to pay loan-closing costs... typically, for such things as title insurance, impounds and hazard insurance. |
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Some lenders may also require that you have at least a
few months' worth of reserves - money in the bank, or in certain types of liquid accounts or investments. Reserves can be an amount of money equal to 2 to 6 months worth of mortgage payments. If you don't have this kind of money, it's important to start with a zero down mortgage lender that doesn't require reserves. |
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Often the zero down feature is teamed with an interest
only option. Here's a view of the pro's and con's regarding these types of popular mortgage programs... |
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• Lower monthly costs than almost any principal-and-interest
mortgage. Can be a good choice for people who need or want to reserve cash.
• Allows borrowers to qualify for bigger mortgages. The
lender approves your loan based on your ability to afford the monthly payment. So, if you can afford about $2,000 a month, that might get you a traditional fixed-rate mortgage of $335,000 at 6 percent, or an interest-only mortgage of $400,000 at 6 percent.
• Borrowers can pay up to 20 percent of their principal
annually without penalty. That's helpful to those whose income fluctuates during the year - for example, those paid on commission.
• Potentially a good choice for buyers who plan to sell or
refinance before the interest-only period ends, and when their payments may go up .
• Allows a buyer with little savings, but sufficient income and
credit to purchase a home. When home prices are rising, they often outstrip people's ability to save for a down payment. But by buying a home for no money down, buyers can start building equity quickly. |
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The Pros...
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The Cons... or at least things you need to know about zero
down, interest only loans. |
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• Monthly payments have the potential to rise after the interest-only
period ends, and will depend on prevailing interest rates. But, most borrowers plan to refinance before the interest only period ends.
• Poor choice for borrowers who want to know exactly what their
payments will be after the initial interest-only period.
• Poor choice for borrowers whose goal is to gain equity by paying
down their principal.
• Interest rates for zero-down loans are typically slightly higher,
because of the increased risk that the borrower will default. |
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For fast
answers
on zero down,
interest only
loans, and all other types
of purchase and
refinance mortgages...
in all 50 states.
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Get preapproved for the lowest rate, zero down and/or interest
only loan available anywhere... Mortgage Match always goes the extra mile, and works hard to get you the loan you want... |
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...for fast, hassle-free 100% financing.
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Please also see...
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1. Get Preapproved.
2. Receive your Preapproval letter.
3. Find a home to buy.
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4. Fax us your purchase agreement.
5. Sign your closing docs.
6. Take title to your new property.
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Click here for a fast and free preapproval.
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The Mortgage Match "Buy Your Home" Express Plan.
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