Home without Down Payment ~ understanding loans

So it’s clear that one doesn’t have to kill their dream of getting a house, because every problem got its solution and there are 2 solutions for this problem. One is that you can buy a house on down payment or secondly you can use 0% down payment way, because at the end of the day its upon the buyer to choose the one which suits him and his conditions.

Humans creed has got some essentials for living a good life. Those essentials are Food, Cloths and home, in which home is really an important one. Everyone wants to have his/her dream house with a good number of bedrooms, with a hall, with a big kitchen, with a big yard etc. But there is a hurdle in between the completion of this big dream which is money. When people buy a house on down payments then the happiness and stability are always compromised because property rates are going high and even if you buy a small house it will cost you quite high and even a 3-4 % of down payment on the total price of the house will cost you 4000$-7000 $. Even the FHA loans also require down payment of 3.5 %. So does it mean that we should not buy our dream house and then regret in life ahead? No is the answer, because money doesn’t have the power to stop our dreams to come true and the solution for your problem is down below.

Mortgage Loan

Mortgage word seems little harsh but is the right way to describe this way. In mortgage loan the buyer or owner of the house gets loan with zero down payment and have to pay the money after many years ( 20-30 years). In mortgage loan not everyone can get the loan because it is given only after seeing the credit scores of the person, because the money loaner have to be sure that the person who is taking the money have the potential to return the money because if a person don’t have a job and wants loan then the loaner will never lend the money. Doubt about credit score? Well lets clear it, credit score is a rating in the numerical values of a person’s economical history. This rating is given by credit bureaus based on the credit report. Then these credit scores are used to evaluate the potential risk in lending the money to a person.

The advantages of a mortgage loan are unbeatable as it provides-

Full price responsibility- The loaner pays the whole price of the house so the buyer doesn’t have to tension about it.
Gives time- Mortgage loan’s main benefits are that the borrower gets enough time to get stable and save the money which he/she have to pay in the given years.
Improves credit ranking- A mortgage loan also provides a good credit score which helps the owner in the future to get loans or for other stuff.
So from above it seems that this way has got no problem but then why this name was given to it? Well the reasons are down below-

In between the time period given by the lender to borrower to pay the debt, there is an amount of money which is added into the total amount every year as an interest, so at the time of paying the price, the money will be much higher than the real price of the house.
A promissory note is also given to the lender by the owner and this note says that if the owner fails to pay the money to the lender then the house will be taken away from the owner.
So there are some risks but still it may suit some peoples.

VA Loans

This type of loan is specifically for military families and veterans. This loan was started since world war ll.VA Loans Just like mortgage, VA loan also pays 100% price of the house. For this loan one has to first take COE or Certificate Of Eligibility from VA eligibility center. Then submit it to the Veterans Administration office. This loan is also a 0% down payment loan. But the thing which differs it from other is that the PMI is not to be required and it will help significantly with your monthly cash flow and will also decrease the long-term cost of owning your home. So for veterans this is a quite good option provided by the government. The VA also provides some extra benefits- No early Prepayment penalties, easier financing, access to the lowest VA mortgage rates.

But nothing is perfect, so VA loans also got some disadvantage too-

Funding Fee- While the loan has approved a funding fees is have to pay which is around 3% of the total mortgage.
Too many steps- This is also the confusing thing for many peoples because as the loan is given by the VA department, in which there are many formalities and things which have to be checked before giving the approval.
Sellers- Well this the main reason why most of the sellers don’t sell their house to a buyer who is taking home with the help of VA loans because in this process here is a limit to what fees can be charged to the buyer using a VA loan, a seller could find themselves being forced to pay more at closing and who wants to send money at the time of selling the house.
Strict rules- There is also a problem that the VA department don’t approve the house until and unless some modifications are made in the house from the seller, so this loan may be buyer friendly one but surely not good for the sellers.
Even though these disadvantages are not that big problem but still it is something to be noted.

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