People all the time tell me they are waiting to purchase a house until they can save enough money for a down payment. My first question is always, why? I typically will receive 1 of 2 responses, "Don't I have to have some type of down payment" or "I want to get a good interest rate." This probably the biggest myth in the real estate industry.
There are dozens of loan programs/mortgages that are available that don't require any down payment and they all offer great interest rates. In fact, purchasing a house usually will take less money out of your pocket than renting a home. When you rent a house you have to make a security deposit and pay the 1st month rent (some time the last month too), however, when you purchase a house the only money that is out of your pocket is the earnest money (typically $500-$1,000, and you usually receive this back when you close).
Any time your mortgage finances over 80% LTV (if you purchase a house for $100,000 and you mortgage is for $90,000 you are financing 90% loan to value (LTV)), you will have to pay monthly private mortgage insurance (PMI). PMI helps reduce the risk for lender by insuring the lender against defaults, therefore, allowing the lender to offer you a better interest rate. While, a mortgage with PMI will add to you monthly payment, it is tax deductible if your household income is less than $100,000 and many of the no down payment programs/mortgages offer reduce PMI rates.
Another option for 100% financing is to obtain a first and second mortgage, often called an 80/20 (your 1st mortgage finances 80% of the purchase price and the 2nd finances 20%). The advantage of an 80/20 is that you can avoid paying PMI and therefore, at times can offer a lower payment.
For more free information on mortgages or real estate please visit us at, http://www.myprosperityfinancial.com/ or you can call me or one of our mortgage professionals at 303.666.6550.
Prosperity Financial, LLC
Lafayette, CO 80026
Refinance - Purchase - Cash Out - Home Equity - Great Rates
There are dozens of loan programs/mortgages that are available that don't require any down payment and they all offer great interest rates. In fact, purchasing a house usually will take less money out of your pocket than renting a home. When you rent a house you have to make a security deposit and pay the 1st month rent (some time the last month too), however, when you purchase a house the only money that is out of your pocket is the earnest money (typically $500-$1,000, and you usually receive this back when you close).
Any time your mortgage finances over 80% LTV (if you purchase a house for $100,000 and you mortgage is for $90,000 you are financing 90% loan to value (LTV)), you will have to pay monthly private mortgage insurance (PMI). PMI helps reduce the risk for lender by insuring the lender against defaults, therefore, allowing the lender to offer you a better interest rate. While, a mortgage with PMI will add to you monthly payment, it is tax deductible if your household income is less than $100,000 and many of the no down payment programs/mortgages offer reduce PMI rates.
Another option for 100% financing is to obtain a first and second mortgage, often called an 80/20 (your 1st mortgage finances 80% of the purchase price and the 2nd finances 20%). The advantage of an 80/20 is that you can avoid paying PMI and therefore, at times can offer a lower payment.
For more free information on mortgages or real estate please visit us at, http://www.myprosperityfinancial.com/ or you can call me or one of our mortgage professionals at 303.666.6550.
Prosperity Financial, LLC
Lafayette, CO 80026
Refinance - Purchase - Cash Out - Home Equity - Great Rates
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