Zero Down Mortgage Loans

We all know that the “American Dream” is to own a home, and in today’s economy, it seems like it may never happen. But don’t give up hope, there are different alternatives that have become available. It is the zero down mortgage loans.

There are many people that have never heard of zero down mortgage loans. It is basically just what it says; you literally have ZERO MONEY DOWN for your mortgage. Many people will find this to be a godsend in today’s economy. You won’t have to save for years for a down payment. With the zero down home loan, you are qualified by your ability to make your monthly payments, rather than how much money you put down. The rates and fees are not necessarily higher either. Most of the time they are lower than conventional loans. You may even be able to qualify for a bigger loan, which means a bigger house, depending on the amount of your monthly payments. And even in today’s economy when we should be living small, many people still want that big house. Of course there are plenty of people that need bigger homes, due to growing families.

The zero down mortgage loan is most beneficial for the first time homebuyer, buyers that do not have twenty percent down and for lower income buyers.

Many banks have other programs that are similar to the zero down mortgages. They have different names, but are basically the same thing. There is the 100% homebuyer program.  Two of these programs are the Homeowner 103% and the popular 107%. The 103% allows you to finance 103% of the appraised contract price of the house. The 107% allows you to finance 107% of the appraised contract price. The extra amount can be used as a down payment or to pay closing costs. These plans are basically the same, only they are presented differently. Eventually, they will all have the same results with basically no big cash amount due at closing.

Some of the advantages of the zero down mortgage loan are: first time home buyers use this loan when they don’t want to wait for their twenty percent down payment. Another advantage is the fact that these loans benefit all types of homeowners, those with big investments, good credit, not so good credit, moderate income, etc. If your family wants to help you get into your first home with a monetary gift, the zero down mortgage loan will allow them to do this. The donor is allowed to deposit a cash gift into an interest-bearing account as collateral for the down payment. The gift money keeps earning interest. Another good thing about this loan is the fact that you can be self-employed and you do not need perfect credit.

Some of the disadvantages of the zero down home mortgage are: many of these loan programs DO limit the amount you can borrow and many of these programs charge a PMI insurance which adds to the total monthly cost.

The Federal Housing Administration (FHA) does provide their customers with the opportunity for a zero down payment mortgage. There are quite a few places that provide this loan, although their terms and conditions differ. I think most people in today’s economy would certainly relish a loan like this. When you get into in a better financial situation, you can opt to pay more on your loan or not, but at least you will have your home and equity will be building, slowly but surely (we hope). Today is a really good time to buy a home because the home prices are really low. If a second home is what you are looking for, now is a good time to do that also. You will probably be able to use the zero down mortgage loan also. It really depends on the lender.

As for where to get these loans, I mentioned a FHA loan. They do have certain criteria that must be met. American Independent Mortgage also offers this loan. Uniform Consumer Credit also provides these loan and they have offices in a variety of states. I am sure most financial institutions sand mortgage lenders offer a plan that is equal to a zero down mortgage loan. It may not be called the same thing, but they have to compete, so there is definitely a comparable plan. It is to your benefit to shop around and ask questions in order to find the lender that best suits your needs.

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