100% Financing, Myth or Reality?

Only a few short months ago I was writing about 100% financing and helping clients with their 100% financing requests to purchase homes. Now, six months later, it seems like a dream or a movie I must have seen some time ago.

Lenders are laughing at 100% home loan financing requests now.

That’s OK.  Lenders don’t have much to laugh about right now. The business is in a state of clinical depression. New home loan applications have fallen dramatically. Home sales are down. In Las Vegas there are even companies taking busloads of investors around town to view bank owned and foreclosed properties!

I don’t have to tell you any of this. It’s all over the news every day.

However, tucked away behind all this negative press, there are still some pretty amazing mortgage financing packages available.  Let me tell you about one.

Believe it or not, even though 100% financing is gone (except for special programs I’ll talk about below), you can still get 95% financing up to loan amounts of $667,000. Let’s see, that would be a purchase price of $702,000. And that’s not all.

You can get this 95% home loan financing even in declining markets such as California.

I know, I didn’t believe it at first either, but it is true.

It’s not for everybody. The minimum credit score is over 700. Everything, and I do mean everything, must be fully documented. And you must have sufficient reserves after closing, but you can do it.

The investors offering this program are using the old-fashioned "piggy back" loan to make it happen. A "Piggy back" loan is simply a combination 1st and 2nd mortgage. You end up with 2 payments instead of one. The 2nd mortgage is typically an equity credit line so as you pay it down you have the advantage of being able to use it again later without points or fees.

Now, about the 100% mortgage financing I mentioned above, you can still get a program called the "125", although for all practical purposes we probably should call it the "110". On paper at least, you can get a comination loan up to 125% of the value of the property you are buying. The qualifying guidelines are tough, but again, the program is available.

To sum up this post, 100% is not a myth, but it is rare to be able to meet all the current guidelines.

As always, we would be happy to review your situation and give our professional assessment.