First Time Homebuyer - 100% Mortgage
Financing
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It was not long ago that 100% home loan programs were simply
not a viable option. The best that you could hope for was a mortgage with 3-5%
down. Today, almost all lenders offer some form of no money down mortgage
financing to their customers. As a first time homebuyer, it is important that
you gain a basic understanding of the pros and cons of these programs.
You typically have two options with 100% financing:
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One single loan up to 100% of the purchase price or appraised value (whichever
is less). With this option, you typically have to pay PMI (private mortgage
insurance). Depending upon your credit score and the PMI rate, this option may
be less expensive than a combo loan that carries a higher rate second mortgage.
Also, you may also be able to finance the PMI into your rate and still come out
on top.
Private Mortgage Insurance protects the lender’s investment in your home. If a
lender is forced to foreclose on a property they typically get about 80% of the
value after paying to sell the home, and often selling it at a discount in
order regain their money quickly. PMI is an insurance policy that pays the
lender the remainder of their investment, which is why they require it on any
mortgage where they are loaning more than 80% of the value of the property.
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80/20 combo loans - If you go this route, you will obtain a first mortgage for
80% of the home’s value and a second mortgage for the remaining 20% of the
home’s equity (often referred to as a “piggy back” loan). When second mortgage
rates are low, this option is extremely popular because you avoid having to pay
PMI. Be sure to ask your loan advisor about the various options for second
mortgages. You should be able to choose between both fixed rate and adjustable
rate options.
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Some of our 100% Mortgage Program Solutions
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The Pros and Cons of 100% Mortgage
Financing
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Pros:
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These programs allow people to purchase homes and invest in real estate who do
not have large cash reserves.
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Homeowners enjoy potential tax advantages and have the ability to build equity
by paying down the loan’s principal each month.
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Homebuyers may possibly build equity simply by home prices increasing in their
given markets.
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Money may be freed up to invest elsewhere or be used for other expenses.
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Allows people to pursue the dream of homeownership and helps strengthen
communities.
Cons:
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Interest rates are typically higher than loans with 5-10% down.
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If property values fall in an area, homeowners may end up owing more than their
homes are worth.
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PMI payments do not go toward paying down your principal.
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Payments may change if a homebuyer selects an adjustable rate mortgage product
- be sure to ask you loan advisor if the rates are fixed and for how long.
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Balloon payments on some second mortgages may lead to a large lump sum being
due at one time - make sure that you ask your loan officer if there are any
balloon payments with your loans.
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First Time Homebuyer No Money Down
Mortgage Solutions
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| AAXA has helped thousands of first time homebuyers with their
home financing needs and we have access to some of the very best 100% home
loans on the market. Give us a call toll free at 877-RATE-LOW (877-728-3569)
for a free consultation.
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| First
time buyer mortgage |
| Determining
what you are qualified to borrow and getting pre-qualified |
| Rent
Versus Buy |
| Beginner
Mortgage Checklist |
| Credit
Scores and Mortgage Rates |
| Choosing
a mortgage company |
| Finding
the right real estate agent |
| Pro
& Cons of adjustable rate mortgages |
| What
types of loans are available for the self-employed? |
| Why
do mortgage rates change? |
| What
is a mortgage broker? |
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