No Down Payment Loans- AT GREAT RATES

In this red-hot housing market, it is so difficult for first-time buyers to save the downpayment needed for their purchase. By the time they are able to set aside 10% or 5% or even 3% of a potential home’s value, the housing prices have shot up another 15-20%! Let alone their saving the money needed for closing costs! Our homebuyers are on a never-ending chase trying to get their foot in the door of their first home.

“No downpayment” loans have been around for several years from various lenders. Unfortunately the majority of these home loans came with unattractive interest rates. People who took the plunge into home ownership soon discovered that the home owned them! In other words, the payments were such a large portion of their income that they had little money left over from their paychecks after making the mortgage payment. It wasn’t until the house had appreciated enough to be able to refinance the mortgage and lower their payments that they could once again have a life outside their home.

I just closed a loan for a couple that has blown that scenario right out of the water.

The particulars of the transaction were: good (but not perfect) credit, good income, and some savings- a little more than the closing costs. The loan programs consisted of an 80% first mortgage and a 20% second mortgage. The first mortgage is an adjustable rate (no negative amortization) that is currently below 4%! This rate was fantastic enough; but wait, there’s more! This mortgage also allowed interest-only payments for the first 10 years. Wow! The second mortgage was a fixed rate on a 30-year amortization under 7%; however they could have chosen a home equity line for that portion of the total loan. The payments were almost $1,500 a month less than what conventional financing would have provided.

You don’t need to be a first time homebuyer to qualify for this program, either.

This scenario is not for everyone, but it may help “get you in the door”.

Fixed interest rates for conforming loans (under $333,700) as of 9/21/04 (a.m.) are:
(rates quoted are at “0” points)
30 year fixed: 5.5% (APR 5.58%) payments are $1,894.71/mo
15 year fixed: 4.875% (APR 5.00%) payments are $2,617.20/mo