People with liquidity crunch, especially those who are purchasing house for the first time, can get really bogged down by the cumbersome and frustrating process. More so, if you have very limited or almost a negligible amount to pay as down payment. However, with the current real estate market condition, together with the low interest rates, financial companies are coming up with new and innovative schemes to attract more borrowers. One such concessional scheme is the zero mortgage option, also called 00 percent financing.

100 percent financing option provides the borrower the opportunity of home ownership, with zero down payment. Thus, owning a house is no longer a distant dream. While ordinary mortgages require an upfront payment, ranging anywhere between 10 to 25 percent, a borrower can acquire a mortgage under 100 percent financing option with no down payment. You will, of course, have to shell out funds for charges like closing costs, etc. However, if you find the right lender, these costs will come out to be a very small percentage of the purchase price of the property.

Now let’s face it – there are no free lunches in this world. The colossal financial flexibility of zero down payment comes with certain strings attached to it. Fair enough too, considering the huge risk the lender is assuming. First and foremost, 100 percent financing comes at an interest rate much higher than the ordinary mortgages.

Another factor to consider is how heavily the lender is relying on their ability to recover the investment they have made in your mortgage. To ensure that the price you pay is at par with the market value of your home, they may conduct or refer an appraisal, the cost of which will have to be borne by you. If your appraisal matches the sale price of your home, you will be able to proceed with the sale process.

In addition to this, the lender will charge additional fees for processing the loan documents, etc. This is called as points or loan processing fees. You will also be expected to set aside funds for other fees such as legal fees, real estate fees, land transfer tax, etc. Another factor to consider is how heavily the lender is relying on their ability to recover the investment they have made in your mortgage. To ensure that the price you pay is at par with the market value of your home, they may conduct or refer an appraisal, the cost of which will have to be borne by you. If your appraisal matches the sale price of your home, you will be able to proceed with the sale process.

Qualification criteria for a zero payment mortgage are similar to a traditional mortgage. Your credit score and history is of utmost importance. 100 percent mortgage is advanced only to people with liquidity issue and not to those with a bad credit history.

For more information, you may contact:
Allegro Mortgages Corp. – Best Broker for All Your Financing Requirements
(416) 987-0008

Check out amortgages.ca for information on different refinancing options.

Author Bio: Please visit the website Amortgages.ca if you are interested to learn more about 100% financing. The website also provides information on mortgages Concord and mortgages Thornhill.

Category: Finances
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