No down home loans is the only solution for buyers who want to jump over the down payment hurdle that's preventing them from purchasing a house. It is often the only real solution for first time home buyers who have no equity or savings. A no down home loan is crucial when prices skyrocket. When median house rates reach $400,000 and beyond with lenders demanding a 20% payment, this is often the only way a family can afford to make a purchase. Without this deposit, there will usually be much higher interest rates and private mortgage insurance, plus the consumers monthly payments will be higher. On the positive side, the individual has a house of their own and they are building equity.
Taking on the purchase of a house in this manner is not done with conventional mortgages. Anytime the consumer is paying less than 5% of the price of the house, they have to juggle term options. The lender will help weigh the options as they apply uniquely to the family's finances. In fact, lenders are required to offer special mortgages to low income borrowers because of legislation called the Community Reinvestment Act. There are simply limits on the size of the no down home loan which may determine the size and value of the house the individual will be qualified to buy.
Many of these no down home loans will also include enough financing to cover closing costs. Sometimes the state or the consumers occupation (especially with professions known for high wages) will help them qualify. Another option is called a piggyback, combining a first mortgage with a second mortgage large enough to include the down payment. Obviously, the individual will need very good credit and a solid income to qualify for this because of the heavy mortgage.
The government may be a good place to find assistance. Many loans are offered by government programs, even though these no down home loans might have even lower limits restricting the home price. Congress created Fannie Mae and Freddie Mac companies to make more assistance available to the public. The Department of Veterans Affairs has a similar plan where the individual will be required to pay no money down, low interest rates, and there is no need for private mortgage insurance. An individual can see if they qualify for this loan through any VA-approved lender. If there are any securities that can be pledged as collateral, a brokerage firm might qualify the consumer for a no down home loan, but this will put the security at risk if ever the value falls. Understanding the risks and being prepared for anything is important for the individual who does not have the funding to make a deposit on the purchase of a house. "Cast thy burden upon the LORD, and he shall sustain thee: he shall never suffer the righteous to be moved" (Psalm 55:22). A situation of this magnitude calls for faith in God above all else.
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