Buying a house with no money down is something you will want to thing about if you are shopping around for a new home. There are some significant advantages to a no money down mortgage and there are some significant disadvantages. It’s important that you understand both before committing to anything.
A no money down mortgage is where you don’t need to put a down payment on the house to qualify for the mortgage. There are some compelling reasons why you may want to put a down payment on a home however. Let’s take a look at some.
A down payment on a home will qualify you for a lower interest rate. Remember, even shaving a fraction of a percent on your mortage interest rate will save you thousands of dollars over the years. A down payment will also lower your monthly payments because you have already paid off part of the home. A lower balance owing on your home will equal lower interest paid on the amount as well.
Now, there are cases when you may want a no down payment house. If you actually don’t have the money for a down payment, then there is no real choice in the matter. If you are buying up homes to use as rental property, then no money down house buying makes a lot of sense – you are using the banks money to make money.
Buying a home with no money down can be accomplish, both with good and bad credit. Naturally, it’s far easier to get a mortage loan with good credit than it is with bad credit. The credit market has changed over the past year and a half and it’s no longer easy to get mortgage loans from bank unless you have very good credit. The days of easy sub prime mortgages offered by banks are long gone.
But for those with bad credit – and lets face it, most people today have bad credit – you can get a home loan with no money down. The first thing you need to ask if you have bad credit is how bad is your credit? The worse your credit, the more difficult it will be. If you have borderline bad credit, you may be able to convince a bank to give you a no money down mortgage if you can explain your bad credit away and show them you make more than enough money to pay the mortage. Don’t expect a fantastic mortgage interest rate though.
If you have really bad credit, you can kiss your chances of getting a traditional mortage loan away unless you get a secured mortgage. Typically though, you will need to have another home to use as collateral for your second mortgage with no money down. Most people are not in the position to do this.
Finally, the last option is to seek out a bad credit home loan with no money down. You can find these no money down bad credit loan offers by looking around online. The interest will be higher for these types of loans though, so do plenty of research and comparison shopping between lenders for the best and lowest bad credit mortgage loan rates.
