100 Percent Financing
For the novice home buyer or the inept financial consumer,
home loans, mortgages and residential loans can spiral into
a whirlwind of confusion. Though most consumers are familiar
with the conventional and conforming loan, the edgier |
more innovative loans that have popped up within the mortgage
industry can prove a little overwhelming.
Perhaps the name, 100 percent mortgage program, sounds
a bit egotistical. However, it is an authentic mortgage
classification, under which a host of mortgage plans are
listed. Of course, not all 100 percent loan products employ
the same terms or offer the same benefits. Yet, all 100
percent mortgages do have several elements in common.
To understand how 100 percent mortgage financing works,
the following requirements for the prospective borrower
are necessary: 1) nearly perfect credit 2) cash reserve
in place for the settlement.
Apparently, due to regimented requirements, the 100 percent
mortgage excludes a large percentage of the general population.
Simply put, most middle class families or other individuals
will flat out not qualify for this type of loan.
Yet, from the perspective of the lending institution,
the eligibility criteria make perfect sense. As a mortgage
with either a little or zero money down can be moderately
to extremely risky, the risk factor is equated into the
value of the mortgage product. For those then who meet the
qualifications of a 100 percent loan, they are in a prime
position to receive a significantly higher quality product.
From the perspective of the borrower, the advantage of the
100 percent loan is that it does not necessitate him | her
to plop down any cash whatsoever in advance of closing the
deal. On the mortgage company’s part, though there
is a heightened sense of risk since the borrower does not
use their own money as a down payment, their fears are mostly
alleviated due to the fact the borrower has impeccable credit.
In summation, 100 percent mortgage financing is ideal
for those individuals or partnerships desiring to purchase
property as an investment. As the monthly payments and interest
rates are higher than those of fixed or adjustable mortgage
loans, the advantages of retaining one’s cash, as
well as, increased equity outweigh the negative factors
of having to make higher payments.