100% Financing Mortgage Loans

Applying for 100% financing mortgage loans is still possible for individuals who need to get a sum of money to purchase a house quickly and easily. This article gives more details about these kinds of mortgage loans to help you decide whether this is the right choice for you or not.

What are 100% financing mortgage loans?

As the name suggests, 100 mortgage refinance loans are loans that provide you with all of the finances that you need to purchase your property, unlike other kinds of loans that only offer partial financial support. The beauty of this type of loan is that it doesn’t require any down payments, thus making it easier for people to pay their loan on time. Because of this characteristic, these loans are also called zero down mortgage loans.

Benefits of 100% financing mortgage loans

There are several benefits you can get when you avail of this type of loan. These include:

  • Allows you to purchase your home quickly. You don’t have to wait for several years before you can purchase your new home, as this loan allows you to buy your new house quickly and easily.
  • Budget-friendly. As mentioned earlier, these loans don’t require down payments, making it easier for middle-class families and even newlyweds to purchase their own home instead of renting.
  • Easy to find. There are a lot of financial institutions that offer this type of loan, so it won’t be difficult to find one that suits your needs. The Internet is always a great place to start your search for this loan.

Types of 100% mortgage refinance loans100% financing mortgage loans

There are three types of these loans:

  • Private mortgage insurance (PMI). In exchange for fully financing your home, this type of loan requires you to purchase PMI, which will cover the loan you took out in case you are unable to make the necessary repayments. Once you have 20% equity of your home, it’s possible for you to cancel the insurance policy to save some money in the process.
  • Piggyback loans. Piggybank loans do not cover 100% of your finances. Rather, this type of loan usually has an 80-20 arrangement, with the 80% covering the payment for your home while the 20% requires down payment.
  • Special loans. Some financial institutions provide 100% financial loans for individuals with special needs provided that they meet certain criteria, which may include restrictions on income and home value.

How to qualify for 100% financing mortgage loans?

There are several criteria that you will need to fulfill in order for this type of loan to be granted to you. These include:

  • A good credit score. As you can see, this type of loan is potentially risky for lenders as they stand to lose a lot of money in case the borrower defaults. As such, they will need to have the assurance that the borrower has the capacity to make the repayments. In order to do so, only those who have a credit score of 600 or higher are those who are allowed to take out this kind of loan. It’s possible for someone with a bad credit record to take out this loan, however, this will mean paying for a higher interest rate in order for this loan to be approved in his or her case.
  • Regular payment of bills. You will also need to show proof that you pay your bills regularly, as this is proof that you have the capacity to meet your monthly obligations.
  • Steady source of income. Finally, you will need to show proof that you have a steady source of income from which you get money to make the loan repayments.

In choosing a loan, make sure that you shop around to find the best rates. That way, you won’t end up spending more than you have to when you apply for 100% financing mortgage loans.

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