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Purchasing a Home With No Downpayment

New homebuyers are told that they need a 20% downpayment in order to purchase a home on the Phoenix MLS. Some view this as proof that the Arizona Arizona home market, and the entire country, is going through a downturn and is in a museum for the next 25 years. While this may be true in the Great Grand Old West, no one should view 20% down as being forever outdated. While some mortgage products require a larger amount down in getting Your Dream Home Dallas, the conditions are very different from what is available in Maricopa and Pinal county.

What’s available in front of your broker may be a CMBS (collateralized debt obligations) or a state-sponsored FHA product, also called 100% financing. It’s true that 100% of loans are part of the CMBS purchases that go through FHA. Most of these loans require a 3% to 5% down payment. A percentage point of the loan amount and PMI insurance are paid for with the monthly mortgage payment. The difference is paid in a monthly charge.

What’s available with no money down on the Maricopa side and an FHA backing for the no money down AZ refi option is the ABC Mortgage product. This loan is fully assumable with either a 3% down or no down payment. The closing costs are minimal with only $900 due at the time of closing on a $300,000 purchase. This is the best product available to accomplish the goals of the 20% down requirements. It’s also available to those buying premium properties.

When looking at the CMBS products available, the first thing that comes to mind for many homebuyers is the FHA product, but there are slight differences. These CMBS loans have mortgage insurance added on and are subject to mortgage insurance and a PMI charge.

FHA loans have received a lot of negative press in the last year. aluminum and energy claims have been blamed on FHA loans, so do double checks on borrowers with FHA loans before closing.

If you need 20% down, the CMBS option is the best. It comes with no down payment requirement and requires mortgage insurance. Mortgage insurance is added to the monthly mortgage payment, reducing the borrower’s cash flow. It doesn’t reduce the loan amount, but it slashes the cash flow of the smart homebuyer. The amortization of this property is 30 years with a 30 year fixed rate. This means that it will take 30 years to reduce the principal loan amount by 20%.

Noone mentions that problem financing exists in today’s real estate market. Yes, there are some homes that should never have been purchased. Of course, this loan product still exists for the 20% down requirement and the amount financed is different than the full 20%. The seller’s acquisition and construction costs are transferred to the new homebuyer at the time of closing. In addition, the seller should be willing to fund one month of the buyer’s mortgage payments at the closing table.

The bottom line is to have your financing in place and your home in the hands of a qualified lender. This is not my best advice but thought it might be helpful to discuss it. If you are ready now to find your dream home, take the steps necessary to get your loan approved. A qualified REALTOR should also be able to help you with this process.

If you are considering a home purchase in the next 6 months, now is the time to take some steps to make that dream come true. You and your REALTOR should take the steps necessary to give you the best chance of success. Once that loan is approved, you are on the path to homeownership!!!