Okay they say on 100% mortgage loans??

Question

That you have the seller pay the closing cost..For instance, you offer someone what they are asking for the home and ask them to pay 6% toward your closing costs (most lenders allow up to 6% to be paid by the seller). Let's say your purchase price is $100,000, the seller can pay up to $6,000 towards your closing costs and prepaids (taxes and insurance). Your closing costs will not add up to this much, so you actually get into the house without any money out of pocket.



Does this sound right??

Answer 1

Yes, thats how the program works. You end up with a house and you put in almost no$. The problem is that many (almost all) lenders have cut back DRASTICALLY on these programs in the last few weeks. As property values have stopped their rapid climb in many areas of the country and defaults are rising, many lenders are holding back and mitigating their risk.

Check with a lender - you may not qualify for them anymore.

Answer 2

1. You have the model correct.

2. It will vary based on the lender and the borrower. If you have weak credit the lender might not want to offer a loan for 100% (even a combination of 2 loans). The subprime market is cutting back though the prime market is not seeing the same changes.

3. There are federal programs through Fannie Mae & Freddie Mac that are optomized for new buyers who have a limited down payment. They allow 3% to 6% as you noted. The two organizations are cutting back on loans where the borrower has no down payment plus weak credit. To cut back means they they are raising the documentation requirement or expecting a 5% down payment. Your credit score, the house price and some other variables will determine just what you can achieve.

Answer 3

yes

Answer 4

its the way i bought my house