No Down Payment Loans

No down payment? Yeah it’s been around for a few years, and the loans that are offered were pretty much a train wreck waiting to happen. Yes, the loans allowed a buyer to get their “foot in the door”; but the loans always had some severe problems involved. For years the 100% loans available were a combination of 2 different mortgages. The first mortgage was usually a slightly higher fixed rate than the prevailing market, and a second mortgage at a considerably higher rate then the market. The second mortgage was usually an adjustable rate also with a large pre-payment penalty. Your hopes as a buyer were that the house would appreciate enough in the next couple of years, and the rate on the second wouldn’t become unaffordable for you, so that you could refinance or payoff the second before it did too much damage to your pocketbook.

Now there are some lenders that have taken that particular bullet out of the gun and are offering one fixed rate loan for 100% financing. My assumption is that they are starting to see some foreclosures on the old programs and are taking some heavier than predicted losses. With one fixed rate loan, the buyer/borrower qualifies now and, presumably, will continue to qualify in the future, leading to fewer foreclosures down the line. The new loans have no prepayment penalties, don’t require mortgage insurance and the rates are only slightly higher then conventional mortgage rates.

This loan isn’t just for buyers either; it is a suitable replacement loan for those who may have purchased their home in the last couple of years with one of the “old style” 100% loans with not enough appreciation yet for a conventional refinancing.

Give me a call and we can work the numbers to see if this, or any other scenario, may help you financially.

Fixed Rates for conforming loans (under $417,000) at 0 points as of 8/21/06 (a.m.) are:

30 year fixed: 6.375% (APR 6.449%) payments are $2,601.54/mo.
15 year fixed: 6.125% (APR 6.246%) payments are $3,547.11/mo.