If you are like most people, saving up for a down payment can be a major hurdle when buying a home. However, there are many ways to get into your home without having the burden of saving up for a down payment.You can choose to obtain an 80/20 loan if you do not have enough money for a down payment. Your first mortgage will be 80% of the purchase price and your second mortgage will be for 20% of the purchase price. By obtaining an 80/20 home loan, you will be able to buy a home with zero money down. This type of financing is becoming extremely popular and it also allows you to avoid paying mortgage insurance, also known as PMI.
If you're purchasing a home, 103% financing is available. With this loan program you can finance the sales price, and most of the fees or prepaid items.
If you have decided to save a larger down payment for your new home purchase, you should use the mean time to carefully review your credit report for errors. Most credit reports contain false or outdated information that could cause you to have a lower than expected credit score. Lower scores usually mean a higher interest rate. Combine a cleaner credit report along your larger down payment and you will be much more likely to get a loan approval with favorable interest rates.
Depending on the type of loan program you are pursuing you may be able to receive a gift from a friend or family member, or as concessions from the seller of the property that will help pay for closing costs and allow you to buy a home with no money down.
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