100% Financing

Today’s lending market is far more lenient with home loan financing than in times past. The ability to borrower up to 100% of the home's value would have been un-thought of 20 years ago.

100% financing can be obtained by financing one loan at 100% of the value of the home or by dividing the loan up into two mortgages and financing an 80% 1st mortgage and a 20% 2nd mortgage, which is called an 80/20. An 80/20 is becoming a very popular financing option for people looking to avoid mortgage insurance.

When you are purchasing a home with 100% financing it is an option to get the home sellers to pay your closing costs. This can make owning a new home a very low cost process.

When you are purchasing a home with 100% financing it is an option to get the home sellers to pay your closing costs. This can make owning a new home a very low cost process. Make sure your realtor knows that you want seller paid closing costs when you write your offer to purchase.

In 2005, 43% of first time home buyers used 100% financing programs.

There are even programs that will allow you to finance up to 103% of the purchase price of the new home, the additional 3% is used to help pay for closing costs.

In addition to the 100% programs for your primary residence there are now programs that will allow you to purchase a non owner occupied or investment property to 100%.

Since real estate values have increased at a much faster pace in recent years, many home buyers find it difficult to save for a down payment. As a result, 100% financing has become ever more popular. Although more banks are offering an array of 100% financing loan products, home buyers should be realistic and expect to pay higher interest rates on these types of "No Money Down" mortgages.

If possible, it is recommended to split the 100% financing into 80/20 to avoid PMI on the mortgage. The borrower should be aware that the PMI you pay every month is not tax deductible.

The 80/20 combo is the most popular 100% loan available although there are a few lenders who are giving better pricing with the 70/30 and 75/25 combos.

Usually people will go with 100% refinancing in order to be able to take as uch cash out that is needed. There is also 80/20 programs that may have lower rates

The nice thing about 100% financing is your interest deduction is much higher than a regular conventional loan.

Fannie Mae and Freddie Mac loan programs allow 100% financing to purchase a home and for rate/term refinancing. These programs are available to borrowers with slow to excellent credit.

100% financing has helped more people than ever become home owners. Remember that if home prices fall you can owe more than the value of the home.

» DISCLAIMER: The information contained in this article on '100% Financing' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.