100% Financing

There are many forms of 100% Financing. The most common is what is referred to as a "80/20 Loan". This means that your loan is broken up into a 80% first mortgage and a 20% second mortgage. This means you will have to make out to seperate checks for each loan. Sometimes both can be with the same Lender but most times they are not. They may start with the same Lender but most of the time one or the other is sold to a different Lender.

The reason for having two different loans is to avoid Mortgage Insurance. For a definition of Mortgage Insurance click on VA Loans and scroll down to "What is Mortgage Insurance".

Keep in mind that interest rates on 80/20 Loans are always a little higher than Conventional Loans. The reason is because you are purchasing a home with no money down, therefore you have nothing personally invested in the transaction. This makes you a higher risk, according to the Lender. So, they increase the rate slightly. Usually by about .25% to .5% on the first mortgage. Second mortgages always have a much higher rate so be prepared for this.

All rates always depend upon your credit score. Lenders create parameters for rates and if you fall out of those parameters you could easily not qualify for a good rate or not qualify at all. It is unfortunate but many times I have not been able to get the better rate for some people because I missed the cut-off by one point. It happens and it is just one of those things. When this happens I always provide as much action and information as possible to my clients to assist in bringing up their scores.

Different Types of Conventional Loans

There are numerous different types of Conventional Loans. Most people go with a 30 year fixed mortgage. Depending on your circumstances you may want to go with something else. It is during the process of taking the loan application, or if someone contacts me simply out of curiosity, that I ask the necessary questions to determine what type of loan program would be best for you. Because everyone who is purchasing or refinancing a home has different circumstances I cannot honestly say what would be best for you when it comes to the type of financing unless we speak in person. I do not require a commitment from anyone who calls me. What is important is that you get your questions answered so that you are able to move forward with making a decision on whom you want to complete your financing.