Having your own home can change your life for the better. The security of having your own home instead of renting gives you peace of mind and pride in all the hard work you do to keep your home. But what is stopping you from getting a mortgage? Is it because you don’t have cash for a down payment? Read on.
A 100% financing is about two loans in one. The 20% of the loan goes for the deposit and the 80% is the cash you get to pay a new home. Before your loan application is approved you go through a process. Your credit record is checked and you have to show proof of income via your income tax payments or income tax returns. You also have to be a resident in the locality for at least two or three years prior to the loan application.
What’s the fuss with this 20%? That is the nitty gritty of the loan. Without the down payment of 20% your bills bloat because of the private mortgage insurance or PMI fees lodged on the home loan. This is a separate loan also offered by the lender. This 20% loan saves you a lot of money in the long run.
There is nothing special about getting this type of loan, so don’t work up a sweat thinking you cannot get 100% financing for that little house on the block. Everyone, including individuals with spotty credit record can get this financing from a local lender; make sure though you are dealing with reputable lender, not overnight companies that are mushrooming left and right all over the city.
As long as you meet the guidelines for 100% financing and are aware of the small print, you can avoid problems later on. You must at all cost know what you are getting into. Don’t fall for lax underwriting processes and other shenanigans that make the loan amazingly attractive. This is a loan not a government grant and you have to pay the loan with your blood, sweat, and tears. The mortgage broker should be blunt about the terms and spell clearly what you are up against.
Structuring Your Financing
So now you know you qualify for this loan type. Now how about the payment? As a rule of thumb avoid borrowing from different lenders. Look for a lender willing to give you 100% financing whatever your credit record says about your financial health. You have the right to own a home whatever your financial short coming may be. This is a confusing deal and no two lenders have the same policies and this can lead to more confusion.
If you have a low score something below 560, few lenders would look at your loan application. But if you can prove that you have the money to keep up with long-term loan, lenders might reconsider and accept your proposal for a repayment structure. You should get the help of an independent licensed mortgage broker who can do the structuring job efficiently after evaluating your finances.
If that house on the block is up for sale yet, talk to the seller before settling for 100%l financing. Shop around for lower-priced homes. To drive it home, don’t get a house you cannot afford on your current pay. Be smarter than your lenders and eventually own that nice little house on the block.