3 Things You Must Do Before Buying a Home with No Money Down
Zero down mortgages are becoming less common because people are finding other options for buying homes. They’re also getting harder to come by.
Understand what a zero down mortgage really means. Know how much you can afford to spend. Find a lender who offers the program.
If you decide to go with a zero down mortgage loan, it’s pretty simple; there is no down payment. You still will normally pay the customary mortgage processing and title costs but you can buy a home with a lot less money than if you made the standard 20% down payment. If you don’t know who to call, one of our TiredOfRent agents can connect you to a lender that can help you.
Find Out Whether You Qualify for a Mortgage.
To qualify for a zero-down mortgage loan, you’ll need to meet certain requirements. These include having enough income to cover your monthly payments, a two-year work history
Understand the Costs Associated with a Zero Down Mortgage.
If you decide to go through with buying a home with a zero down mortgage, understand how the loan works. Here are some costs associated with a zero down loan as with all home loans: 1. Interest rate. This is the cost of borrowing money. With a zero down mortgage, the lender may charge you a slightly higher rate because you won’t put any money up front. 2. Closing costs. These are fees charged by the bank when you close on the loan. 3. Mortgage insurance (MI). Most lenders charge MI which protects the lender against losses if you default on the loan and the home owner pays a monthly fee for this. One of our agents can connect you to lenders that don’t charger MI for first-time home buyers.
Know the Pros and Cons of a Zero Down Mortgage.
If you decide to take out a zero down mortgage, you should consider these pros and cons: 1. Pros. The advantage is you don’t have to come up with the money for a down payment so that means you can buy a home with less money. The potential disadvantage is you have no equity in the home which is the difference between the mortgage balance and the home value. Zero down home loans are best for people who plan to stay in the home for 2 years or more.
Interested to learn more? We love to chat, contact us today. We are all about helping new home buyers!