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100% Mortgage Financing – A Way To Avoid Private Mortgage Insurance
Author: Carrie Reeder
Ideally, traditional mortgage lenders want new homebuyers to have a 20% down payment when purchasing a new home. Thus, if purchasing a $200,000 home, you should be prepared to have $40,000 as a down payment.
Unfortunately, many people do not have this kind of money lying around. For this matter, private mortgage insurance (PMI) was created as a way for mortgage companies to recoup their money if a homeowner defaults on the loan. There are various loans available to assist people with down payments. In some instances, homeowners can obtain 100% financing, and avoid PMI
What is Private Mortgage Insurance?
Because Americans are earning less money, and home prices are steadily increasing, the majority of the population is unable to save the recommended down payment of 20%. In order to make owning a home possible, mortgage companies created a particular mortgage insurance, (PMI), for people with less than 20% to put down on a home. This insurance protects the lender if you default on the mortgage.
How to Avoid Paying Private Mortgage Insurance
On average, PMI may increase your mortgage payment by $100 – sometimes less, sometimes more. However, there are ways to avoid paying this additional insurance. The obvious involves having at least 20% as a down payment. If this is not an option, homeowner may agree to a higher interest rate. Another tactic entails getting approved for 100% financing.
How Does 100% Mortgage Financing Work?
100% mortgage financing makes it possible to buy a home with no money down. Also referred to as a piggyback loan or 80/20 mortgage loan, 100% mortgage financing involves obtaining a first mortgage for 80% of the home cost, and a second mortgage, or home equity loan, for 20% of the home cost. Together, the first and second mortgage allows a home purchase with no money down, and no private mortgage insurance.
About the Author :
View our recommended 100 percent financing mortgage company online. Source: www.isnare.com
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A Quick Note
From The Publisher...
If you like the article above, you may be
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Zero Down Mortgage Loans - First Time Home Buyer Loan Programs |
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Because of a larger variety of mortgage loans available, first time home buyers may become easily overwhelmed with the home buying process. Understandably, those entering the housing market may not know which loan program best fits their needs. Working with a mortgage broker is helpful. They can guide you through the entire process and help you select a loan with the least out-of-pocket expense. Main Setback of Purchasing a New Home Buying a first home is an American dream. The home buying process involves paying out-of-pocket cash for down payments and closing costs. Unfortunately, many families are unable to achieve this dream because of having a small cash reserve. Years ago, families would have to postpone buying a home until they had acquired adequate funds. Because of rising home prices, many families can no longer afford to wait. Thus, several first time home buyers are taking advantage of zero down mortgage loans. How Do Zero Down Mortgage Loans Work? There are many... |
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Mortgages, Mortgage Loans News |
Mortgage loan officers may have to reveal more (Miami Herald) Should your mortgage loan officer have fingerprints on file in a national electronic database, even if he or she has never been convicted of a crime? Mortgage lender cuts maximum loan (BBC News) The maximum loan for first-time buyers in Jersey is cut from 90% to 75% by one of the island's biggest lenders. Woes affecting mortgage giants raise loan rates (Greater Baton Rouge Business Report) (From The New York Times ) Mortgage rates are rising because of the troubles at the loan finance giants Fannie Mae and Freddie Mac, threatening to deal another blow to the faltering housing market. Mortgages: Inflation fears send mortgage rates soaring (Market Watch) Mortgage rates spike this week on inflation fears, with the benchmark 30-year, fixed-rate loan soaring more than a quarter percentage point to a national average 6.63%, its highest level in nearly a year, Freddie Mac says. U.S. mortgage rates rose during week (UPI) WASHINGTON, July 24 (UPI) -- Interest rates for 30-year, fixed-rate mortgages rose in the United States in the last week, the Federal Home Loan Mortgage Corp. said Thursday. Mortgage woes hit Downey Savings & Loan (Los Angeles Times) The Newport Beach thrift carries many of the kind of risky loans that brought down other lenders. When banks were failing in the 1980s, federal regulators turned to Downey Savings & Loan, a quietly successful, conservative Orange County institution, for help. |
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