Over the years, one of the "tools" that have made it easier to get a home mortgage loan has been the 100% mortgage. In this mortgage loan, the buyer does not have to put anything down. The days of the 100% mortgage may be gone.
The subprime lending crash woke a lot of banks -- and mortgage insurers -- up to the risks of mortgage financing for the entire amount of the home. Now you are required to have at least a 5% down payment (and sometimes 10%) when buying a home.
Not that this is a bad thing. In fact, I think it might be a good thing. It forces you to consider, seriously, when buying a home such factors as:
- What can I afford?
- How much can I save up for a down payment?
- Can a bigger down payment help me get a better mortgage interest rate?
Before buying a home, take a few months to save up for a down payment. Just so you know, on a $200,000 home, 5% is $10,000.
image credit: sxc.hu
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