The days of putting 20% down when purchasing a home are long gone. There was a time that realtors and sellers wouldn't even discuss selling if you didn't have 20% or even 10% for a down payment. Well times have changed and the lending industry has adapted. With the dramatic increase in home values it is becoming harder and harder to save up enough for that down payment. Banks have come to realize this and now offer a wide variety of no money down programs.
Even if you have money available to put down on the purchase keep in mind that you will need funds to cover closing costs because in most cases those aren't financed. Also you may want or need to make some repairs or improvements to the property after closing. So 100% offers you more flexibility and options.
100% Mortgage Financing Solutions
There are 2 ways to accomplish the 100% financing; piggyback 2 loans or a single loan with PMI coverage.
The traditional way is to get 1 loan for the full purchase price and pay a monthly PMI (private mortgage insurance) payment. PMI covers your lender if you were unable to pay the mortgage payment. The most common avenue for the single loan is via a government sponsored program. An FHA loan is usually the answer. The majority of lenders offer an FHA loan. This requires only 1 loan application therefore only the one monthly loan payment.
The other option is piggybacking loans. Piggybacking occurs when you simultanouesly close two loans on the same property, typically done with the same lender. You obtain an 80% 1st mortgage and then a 20% 2nd mortgage (or line of credit) with acts as your down payment. The purpose of piggybacking is to eliminate the need of PMI.
Choose the right financing option
The best way to determine which path is right for you is to calculate the payments and compare. Consult with one of our trusted lenders to find out what rates and payments would be available to you. They will also discuss and explain the advantages of each avenue and whether you can qualify for one or both. This way you will be able to make an educated decision for financing.
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The 20% down old myth
The days of putting 20% down when purchasing a home are long gone. There was a time that realtors and sellers wouldn't even discuss selling if you didn't have 20% or even 10% for a down payment. Well times have changed and the lending industry has adapted. With the dramatic increase in home values it is becoming harder and harder to save up enough for that down payment. Banks have come to realize this and now offer a wide variety of no money down programs.
Even if you have money available to put down on the purchase keep in mind that you will need funds to cover closing costs because in most cases those aren't financed. Also you may want or need to make some repairs or improvements to the property after closing. So 100% offers you more flexibility and options.
100% Mortgage Financing Solutions
There are 2 ways to accomplish the 100% financing; piggyback 2 loans or a single loan with PMI coverage.
The traditional way is to get 1 loan for the full purchase price and pay a monthly PMI (private mortgage insurance) payment. PMI covers your lender if you were unable to pay the mortgage payment. The most common avenue for the single loan is via a government sponsored program. An FHA loan is usually the answer. The majority of lenders offer an FHA loan. This requires only 1 loan application therefore only the one monthly loan payment.
The other option is piggybacking loans. Piggybacking occurs when you simultanouesly close two loans on the same property, typically done with the same lender. You obtain an 80% 1st mortgage and then a 20% 2nd mortgage (or line of credit) with acts as your down payment. The purpose of piggybacking is to eliminate the need of PMI.
Choose the right financing option
The best way to determine which path is right for you is to calculate the payments and compare. Consult with one of our trusted lenders to find out what rates and payments would be available to you. They will also discuss and explain the advantages of each avenue and whether you can qualify for one or both. This way you will be able to make an educated decision for financing.