The housing market is in flux, with lenders beginning to offer 100% mortgages again. This means that borrowers can purchase a home without having to put down a down payment. This type of mortgage has been absent from the market for over a decade, but is now making a comeback.
For those who are unfamiliar with the concept of a 100% mortgage, it is a loan that covers the entire cost of purchasing a home. This means that borrowers do not have to put down any money upfront, and instead can finance the entire purchase. This type of loan can be beneficial for those who do not have the funds to make a down payment, or who would rather use their savings for other purposes.
However, lenders are being careful when offering these types of loans. They are taking into account the borrower’s credit score and income, as well as other factors such as their debt-to-income ratio. This means that those who are looking to take out a 100% mortgage will need to meet certain criteria in order to qualify.
In addition, lenders are also requiring borrowers to purchase private mortgage insurance (PMI). This insurance protects the lender in the event that the borrower defaults on their loan. PMI is typically required for any loan with a down payment of less than 20%, and is now being required for 100% mortgages as well.
It is important to note that 100% mortgages come with higher interest rates than traditional loans. This is because lenders are taking on more risk by not requiring a down payment. Therefore, borrowers should carefully consider the costs associated with a 100% mortgage before making a decision.
Overall, lenders are beginning to offer 100% mortgages again, which can be beneficial for those who cannot afford to make a down payment. However, borrowers should be aware of the risks associated with this type of loan, and should be sure to meet the criteria set by lenders in order to qualify.