Zero
Down Home Loans - This is a loan where the borrower does not have to
put any money down on the home. The borrower can then use their money
for closing cost, title fees etc...
80/20 loans are sometimes referred to as Piggyback
loans and have the added benefit of not requiring mortgage insurance.
Not all lenders will accept seller-paid closing
costs. Some won't, some will allow up to 3% of the purchase price, and
some will allow 6%.
When the seller does agree to pay the closing costs
of the loan, they aren't actually paying for it themselves. They
generally raise the purchase price an amount equal to the closing
costs. The borrower is still paying it, but it is being added to the
loan amount.
In many cases, a borrow can get a home loan with no
out of pocket expenses when a seller agrees to pay closing costs. In
this scenario, the sales agreement must be specific and state that the
seller will pay borrowers closing costs up to a certain percentage or
dollar amount. Some lenders only allow seller paid closing costs for
non recurring items like one time lender fees. However some lenders
allow non recurring and recurring closing costs to be paid by the
seller, for example: the borrowers prepaid hazard insurance fees.
There are also purchase loans that will allow
buyers to borrower as high as 107% of the value of the home (purchase
price or appraisal value - whichever is lower). This will allow the
buyer to use the 7% to pay for closing costs and debt consolidation.
If a home buyer has enough money to cover the
necessary closing costs associated with the purchase, in other words,
he needs only to take out a 100% loan rather than a 103%, 106% loan, he
would have more lenders and loan programs to choose from, and better
interest rate structure as a result.
There are different types of 100% loans. You can
either get 1 loan for 100% or an "80/20" loan. Speak to your mortgage
professional to see which program is best for you!
