subject: 0 Down Home Loans – Get That Home of Your Dreams [print this page] 0 Down Home Loans Get That Home of Your Dreams
Are you a first time home buyer, wanting to take advantage of the buyers' market, but you don't have a lot of hard earned money to put down? Or, possibly you're discovering that you have outgrown your existing home and you would like to move up, but come to the conclusion that as soon as you get rid of your current home, you won't have the equity required to provide at least the typical 20% down payment. Today's housing market has set more individuals, than ever before, in the situation of needing 0 down home loans. Unfortunately, as the need has gone up for these loans, the options and opportunities have gone down. So what's a home buyer to do?
First of all, if you are a U.S. Military veteran, you may perhaps meet the criteria for exclusive VA 0 down home loans. Your military contribution is honored and greatly appreciated, so these loans in general have excellent rates and no private mortgage insurance (PMI).
If you are non-military, subsequently you will need at least 3.5% to put down for an FHA loan and will be obligated to pay for Private Mortgage Insurance (PMI). A number of banks and mortgage companies provide programs requiring as little as 5% or 10% deposit, however the rates will be higher, your income requirements will be more rigid and you will also have to shell out PMI.
PMI is a distinctive insurance which helps to cover the lender's additional risk for lending more than 80% of the purchase cost of a home. Your real PMI cost is calculated by a range of factors, but there are two primary factors:
First is the loan to value. The less you are putting down, the larger your amount of monthly PMI. Given a 5% down payment, you may take on at least an additional 1% of your loan amount to be added to your payment. For example, a $123,500 loan on a $130,000 home would add somewhere in the neighborhood of $103 to your monthly payment ($1,230/12 months). This is a general estimated amount and will contrast, so be careful to get your precise amount from your lender.
Second, your credit (FICO) score will vary the amount that you have to pay. Any score less than 700 will increase dollars to your monthly cost. It is very critical that you ask your lender for the precise cost prior to even applying for the loan.
Prior to applying for any loan, be certain to have your finances in proper order:
Have a clear grasp of your source of capital for the down payment in addition to monthly payments.
Get a no cost copy of your credit report so you can clear up any questions and can validate any issues prior to filling out a loan application.
Know how much you can afford by writing up a detailed budget. Don't let a loan officer tell you how much you can afford. Only you can settle on your threshold of borrowing comfort!
Unfortunately, for the universal population, 0 down home loans may possibly be a thing of the past. However, with vigilant planning, accurately managed credit and a clear knowing of your total mortgage costs, home ownership can still be your American dream.
