A zero down home mortgage allows you to purchase a home even if you dont have money to cover a down payment which makes them a great option if you are a first time homebuyer or you dont want to spend your savings on a down payment. When shopping around for a zero down mortgage lender online, there are some things that you should be aware of.
Look out for closing costs.
Closing costs are typically 3% of the total cost of the home, which can add up to quite a bit of money out of pocket when you are trying to purchase a home without spending a lot up front. Look for lenders that will work with you to lower the closing costs. This can be accomplished in many ways, from asking the seller to cover all or part of the closing to working to help finance the closing costs by factoring it into your interest rate.
Look out for increased interest rates.
When you borrow money from a zero down mortgage lender, it is a given that you will pay a higher than average interest rate. Usually this interest rate is about 2% higher than you would pay if you had a down payment. Watch out for online lenders that want you to pay a substantially higher rate of interest.
Look for lenders that will help you refinance down the road.
Sometimes, if cash is scarce, a zero down mortgage is your only realistic option when it comes to buying a house. However, you might not always be so low on cash or decide to cash in on the equity of your house by refinancing after you have lived in it for a while. Look for a company that wants to be your lender for the long haul and is willing to work with you to refinance your mortgage down the road when you are in a better financial situation.
A zero down mortgage is a realistic option for those who dont have a down payment, but want to start using their paycheck to invest in a home instead lining a landlords pocket. With a little research, you can find a reputable online mortgage lender that will work with you to make your home owning dreams come true.
Carrie Reeder is the owner of http://www.abcloanguide.com, an informational website about various types of loans online.
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