100 Mortgage Financing

It seems hard to believe it was only ten years ago when a 20% downpayment was required for the purchase of a home. Lenders would not take the chance on offering loans without downpayments. That changed when real estate prices began rising at a torrid pace in 2000, which led everyone to believe that real estate was the investment of a lifetime. This, in turn, led to new types of lending programs. One of these lending programs was 100 mortgage financing. Though not as popular as when real estate was at its peak in late 2006, 100% mortgage financing is still around today. The difference is that the minimum credit score required for 100 mortgage financing today is 700. In the past, you only needed a minimum credit score of 620 to qualify. Today’s tighter lending standards might change and head back in the other direction in the future, but it will depend on which way real estate prices move.

The most enticing aspect of a 100% mortgage financing loan is that there is no downpayment required. This allows the borrower to use money saved for investments, home improvements, unpaid medical bills, or to pay off debts with higher interest. On the other hand, 100 mortgage financing loans will have a higher interest rate than standard loans. If your credit score is excellent, there won’t be a significant difference. It will be nowhere near the interest rates on most credit cards. If you’re credit score is low, you will have a higher interest rate. However, as stated earlier, it’s unlikely you will be approved for 100 mortgage financing if your credit score is below 700. Therefore, this shouldn’t be a concern at this point in time.

100 mortgage financing allows more homes to become affordable for middleclass families and first-time homebuyers, which is beneficial for the overall economy. 100% mortgage financing is often used for 1st mortgages or combinations of 1st and 2nd mortgages. In order to receive 100% financing on a mortgage, the home must be owner-occupied.

In addition to saving money, there are other benefits for 100 mortgage financing programs. One is that there are usually no closing costs. More importantly, you will set yourself up for more tax deductions. A lot of terms and conditions will depend on your geographic location. It’s important to contact a mortgage broker in the area for further details.

100 mortgage financing is best used during times of rising or flat real estate prices. If real estate prices decline while you’re tied-up in a 100% mortgage finance loan, you could find yourself trapped with no equity in your home. That said, real estate prices have recently been hammered, and the most successful investor of all time, Mr. Warren Buffet, often states that it’s best to buy when there’s blood in the streets. If you time a 100 mortgage financing loan correctly, you could make a significant amount of money on your investment.