Myth of the Zero Down Payment

Remember when lenders used to offer the Zero down mortgage? Then just like that, they took it away. Well, there are still options, they are just a bit different.

The Zero down mortgage meant the lender would finance the entire purchase price. This would allow home buyers that were not able to save up a down payment the opportunity to get into home ownership. Sounds too good to be true? Well, maybe it is. This zero down payment did come at a cost. When others were putting their minimum 5% down payment and getting rates in the low 3% (just over a year ago), this option would give you a rate of around 5% as the lender seemed to be doing you a favor but in fact, they were just looking at still collecting the down payment from you in the form of interest. So instead of having 5% equity in your home at the start of your purchase, you took longer to build that equity which really minimized your options when you go to buy your second home.

Although that option may be gone, there are still options for people that maybe haven’t been able to save up their down payment. It’s like a zero down payment but the down payment comes from borrowed credit, like a credit card or personal line of credit. This program is only available if you have good credit and are able to fit the payment of that borrowed money into your debt and still meet guidelines. This is perfect for someone who has a good paying job but no savings. The advantage to this is you start with that 5% equity in your home, you get the lowest available interest rate and you can pay off that credit card or line of credit as quickly as you want to without penalty, saving yourself a lot of money in interest.

If you have been thinking of buying a home but don’t have a down payment, contact me to see if you might qualify for this program . Stop wasting your money on rent and start building equity in a home of your own.

Naomi 1

 Naomi Hamm, Mortgage Broker

 Office: (204) 727-2177

 Cell: (204) 724-7290

 Email: naomi_hamm@centum.ca