First Time Home Buyer Loans With Zero Down
First time home buyer loans with zero down are available today. Sometimes it can be more difficult to get financing when you are buying for the first time, since you may lack credit and lack knowledge in this field as well. However, these types of loans are designed to make it easier for you to finance that first home. Of course, there are both pros and cons to taking out a loan that requires zero down as a down payment.
First Time Home Buyer Loans With Zero Down – The Pros and Cons
In most cases, you’ll find that home loans usually require you to put down a down payment in order to buy a home. Depending on the lender and your credit, you could put from 5% to 20% of the purchase price down. This doesn’t even include the closing costs you’ll have to pay on the loan. This amount can total to thousands of dollars, which most first time home buyers don’t have. If you don’t have enough money to make a good down payment, home buyer loans with zero down may be able to help you out. These loans allow you to finance the entire property value. You can even find lenders that will offer home loans at 103% of the home price or higher, which helps you cover the closing costs as well. Of course, this will be added to your overall debt and you will have to repay it over time.
You’ll find that these loans that require no money down do offer some great pros. One of the main pros is that it makes it possible for you to purchase a home, even if you don’t have thousands saved up to put down as a down payment. Another pro is that sometimes even closing costs can be financed, which makes it easier to make that first home purchase.
Of course, on the other hand, there are some cons to going with these types of loans as well. One big con is that you will not have any equity in your home if you take out this type of loan. A down payment will offer equity in the home, which can be beneficial. Another con is that no down payment may end up raising your interest rates. Putting down a down payment shows that you are more committed to this loan and tells lenders you are more likely to meet your monthly obligations. You may present more risk if you’re unable to put down any money. Terms are less likely to be flexible if you go with a zero down loan as well.
As you can see, there are definite pros and cons to going with first time home buyer loans with zero down. They can definitely be helpful if you are trying to buy your first home and you don’t have a lot of money saved up. However, they can have some negative consequences too. Just make sure you look at both sides of the situation before you decide that this type of a loan is the right one for your home purchase.