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Las Vegas Zero Down Loan |
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What does ZERO down REALY mean? And how does it affect you?By: Frank Watkins As you may have read or seen lately, there are lots of so called "Zero Down" loans available. Loans from Nehemiah to Hart to 80/20 combo loans as well as FHA Access and "State Loans" First let's examine the top three, Nehemiah, Hart and Access. All three of these loans will place a prospective homeowner into a new home, however they do this in different ways. The Nehemiah and Hart loans are very similar and can be explained at the same time. The Nehemiah and the Hart Loans are based on the FHA program and use seller contributions to affect a ZERO down payment for the buyer. With the lender's assistance, the borrower could get into a home with ZERO down payment. But this really doesn't address the issues of the closing costs (unless the seller is willing to pay them). A majority of realtors and borrowers find that in order for this program to work, they must do several things. First, increase the selling price of the home to protect the seller's assets so they may still "walk away" from the transaction with a certain amount of "net" money. And/Or reduce their commissions in order to facilitate maintaining the seller "net proceeds. In addition to this, these programs generally require an "Application Fee" (between $500 - $600) just to apply. And this is NON-Refundable if the borrowers fail to qualify. The Access loan is quite a bit different. The seller does not need to contribute nor do the Agents need to reduce their commissions to facilitate a transaction. The Access loan does it by providing a standard FHA 1st with a second Mortgage based off of 6% of the sales price. For example: If the home costs $100,000, the lender will provide an FHA first of about $97,500 and then will provide a 2nd at 6% of the sales price, in this example being $6,000. This would cover both the "down" payment as well as closing costs and not affect the seller of the agents in either the net proceeds or commissions. Unlike the other "Zero Down" Loan programs, there is only one approval process for the FHA ACCESS loan. In addition to this, there is NO application fee involved with the FHA Access loan. The 80/20 loans are a combination of an 80% first and a 20% second. These loans may be a bit easier to qualify for but they have much higher rates and that mean higher monthly mortgage payments. And they often come with pre payment penalties. "State Loans" are a mixed bag. With good rates and low down, not necessarily ZERO down. The main disadvantage to them is that the buyers of homes using State money have severe restriction made upon them. For example, no part of the home may be used for a home business. Also no rooms can be rented out. The biggest issue in my opinion is that the buyer of the home SHARES equity of the house with the state. So for example if the seller decides to sell their home in 5 years and the house appreciated $15,000 in that time, the state will take half of the equity. As you can see, the FHA Access is by far the best true "Zero down" program to help you get into your new home. All these programs have some limitations and restrictions, so please, if you have any questions regarding these loans or just want further information regarding the FHA Access Loan, please contact me!!! Frank Watkins |
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