03-26-2013 02:04 PM
03-27-2013 07:41 AM
03-27-2013 08:30 AM
I have been offered 100% financing as well and wonder the upside and downside to it.
Additionally, I have heard I will only be offered older homes, is that true?
I would find another lender. That is absurd.
03-27-2013 10:45 PM
Problem with 100% financing is that most your monthly payments end up going towards the interest. Get an amortization chart and you will see the payment amount and how much of it is going to principal and interest of your loan. I am financing 100% of my loan b/c we don't have a choice, biut on the upside, we are planning to stay, this is our dream home. We have thought ahead and planned, in case one of us were to get sick or die. Our note is small enough for either one is to pay without the other person and we have life insurance, as well.
How much of your mortgage payment is going toward interest is due to the term of the loan not the amount being financed. You could put 99% down. If it is a 30 year loan, the majority of your payment will be going toward interest for the first 15 years or so. With a 15 year it starts at about 50/50, within about 2 years more of the payment will be going toward principal than interest.
So ideally, if you want to save on interest payments, only finance an amount that will allow you to afford the higher mortgage payment that you would have with a 15 year mortgage. This can be accomplished by making large downpayment, or by buying a cheaper house.
IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more
FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.