Zero Down Home Loans

June 1, 2011 |

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Zero Down Home Loans

These loans are becoming a rarity since the housing bubble burst. Zero down home loans mean, you are purchasing a home, with the usual origination fees, application fees, legal fees and appraisal and inspection fees but no money towards the price of the home. You are still eligible for the first time home buyer credit with zero down home loans. Your interest rate will be higher with this loan, because of the risk factor for the lender.

Zero down home loans are for those who are cash-strapped and cannot meet the 20% down that is usually required. The money you would have ordinarily put down on the home can go for a variety of other things, like paying off a large credit card debt. Usually, you will have to obtain private mortgage insurance (PMI), which will guarantee the lender gets his money, should you default. If you piggyback your loans, i.e. getting one loan for 80% of the home and another for 20%, you might be able to avoid this nuisance.

It will require a lot of searching to find a lender that still gives zero down home loans. You will have to have an excellent credit rating, to be considered for any zero down home loans. The zero down home loans has contributed to the present housing crisis. If you have no equity in your home, there is a greater likelihood you will walk away from a home that has fallen in value. With no equity, you have no incentive to stay in a home that does not contain any of your money. If none of the zero down home loans are offered, there is still the low down payment loan, which requires only about 3%-5% be given front towards the price of your new home. Zero down home loans can be useful if you are planning to move in the not too distant future.