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What type of home loan is best for someone with 680 Credit score, no money down?

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Home Loan

I’m looking to buy a home. My credit score is 680, but I have no money to put down. What is the best loan option for me? A friend is buying a home and he says his rate is 1% and his mortgage increases by 1% per year. Not his interest rate, but his mortgage payment. That doesn’t sound right to me. Any advice?

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    Actually 100% pay option loans DO exist. There are 1 loan 100% with lender paid Mortgage Insurance and there are the now popular 80/20 with a negam/payoption 1st. You do need good credit to qualify but you can get a first loan at say 7% where you can pay as little as 4% interest only and then a 2nd mortgage behind that first. Now this means your balance could be higher than the home is worth but nowadays buyers are getting homes WAY below value.

    I also do not want you to think 100% should be done as an 80/20. There are MANY lenders that offer 100% one loan with no PMI and it looks like it just became official that PMI is now tax deductible so you may want a 100% loan with PMI. There are many options with your score.

    Now lets talk closing costs. If you have no money to put down, you have the thousands of dollars required to use towards closing costs? If not, do not worry. In this day and age, sellers are desperate to sell and are willing to pay buyers closing costs, all of them, if they get a good enough offer. Most lenders will limit you to about 3% of the purchase price but many mortgage brokers can get you up to 6% seller paid closing costs. I personally have closed a loan for a buyer that put down a $5,000 deposit at contract and walked away with that $5,000 at closing. We financed his entire purchase price plus all of his closing costs. Do not be fooled into thinking the seller is actually paying your closing costs and doing you a big favor, they usually make you raise your offer price to include the seller paid closing costs coming back to you. Just get on the phone with an honest mortgage broker and they should help you out. Don’t forget, it is NOT just about the rate! Check the term of the loan, is it fixed or adjustable, interest only or principal and interest. You can email or ask me any questions anytime.

    ScottMortgageExpert - Sep 09, 2012 | Reply

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