Buying Homes With No Money Down

No Money Down Loans – How and Why?

First time home buyers are usually offered different kinds of skims. A popular skim is buying a house with no money down. Everyone’s dream is to have his/her own house. But money is the biggest factor to buy the house. If there is no down payment needed then this becomes a huge help. Apart from the choices of a perfect house a buyer needs to go through some other process if the buyer intends in buying a house with no money down. The very first thing is getting approval for the mortgage loan. A common and popular concept for mortgage loans was the lender would provide around 80% of the total amount as a loan and the rest was provided by the buyer as down payment. But now the time has changed and buyers get 100% mortgage loans depends on their financial history.

In the past, the 80% loans were a pretty good deal for the buyer. But as the time has changed, some of the lenders offer 100% mortgage loans. Thus the buyer can get a 100% loan to buy the new house without any requirements of down payment. This process allows a buyer to buy a house without any big amount of money and have a house of his/her own for a monthly loan installment. There are several 100% loan providers in the market but the buyer needs to fulfill some basic criteria for that loan.

Requirements for getting 100% loan

When a lender approves a 100% loan, the lenders check the previous history of the borrower or house buyer. If the buyer has a good history of credit, then the lender will think of allowing them the mortgage amount. It also depends on the ability of the borrower. For example, if the lender does not find it feasible or thinks that the borrower’s income is not enough to buy a house then they will not approve the loan. As the lender is providing a 100% loan, the lender’s investment becomes a risky investment. So the lender wants to minimize the risks by analyzing the credit-ability or the borrower. If the borrower wants to have a 100% loan, then he/she should maintain a healthy credit, the longer the better. The borrower should pay off any due credit card withdrawal, any kind of loan and other dues. This will boost up the borrower’s credit-ability to get the 100% loan.

In the perspective of the lender 100% loan contains more risk compared to the general 80% loan system. As the lender is providing all the money needed to buy the house, the borrower has an edge of getting the house with almost no money. If the borrower does not need to pay a whole amount of money then it becomes easier for them. And people tend to take more loan of getting a house. This allows the lender to create more flow of the money and it improves the overall condition of the country’s economy.

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