How to Get a Home Loan With Zero Down Payment
Do you want to get a home loan but have zero to put down? Now is a great time to buy a house, with all the grants and tax credits available to home buyers. Getting a home loan is a tedious process, and it can be even more troublesome if you have zero to put down as a down payment. There are ways to get a home loan with zero down payment! Following some simple steps can make getting a home loan with zero down easier and less stressful for you.
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Instructions
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The first step to getting any home loan, especially when you are only putting zero down, is to get your personal credit in good shape. You will get the best interest rates and credit approvals on a home loan with a FICO score above 690. It is still possible to get a home loan at rates lower than this- but your chances grow slimmer and your interest rates grow higher!
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Once your comfortable that your credit score is good enough to get a home loan, it's now time to get a pre-approval from a lender. A pre-approval on a home loan is a great asset to have when trying to get a loan with zero down payment. Why? Because it shows lenders up front what kind of home loan they are looking at giving you. Most lenders will give you a pre-approval amount for free after meeting with them and providing information like your salary, assets, and debt.
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Once you have a pre-approval for your home loan it is time to go shopping! At this point, you will be shopping for both a home and the lender. It is important to shop for both simultaneously because certain home loans have eligibility requirements that may involve the location of your new home.
There are a lot of different lenders and types of home loans will let you buy a house with zero down payment.
BB&T has a home loan known as the CHIP loan. This home loan requires zero down and does not require PMI (Private Mortgage Insurance). However, if during the appraisal of your potential home the appraiser deems the home to be in a "Declining Market", then BB&T would require a 3% down payment!
Another popular way to get a home loan is to use the UDSA Rural Development home loan guarantee program. Basically, the USDA will guarantee your loan with the lender at a fee to you of 2%. But, they will roll this 2% into the home loan so you don't have to pay anything down! With the USDA you can usually choose the lender of your choice, and then take out a home loan of 102% of the price of your new home.
There are many other lenders and home loans that require zero down. This is why shopping is an important part of the process. Use the resources below this article for more information.
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Once you have decided on the route you want to take to get your home loan, it's time to choose a Realtor. If you truly want to put zero down on your home loan, you need to find a Realtor that will be willing to negotiate a couple of things for you. Remember, the Realtor will be paid by the sellers, not you! He or she will work for you, but be paid by them.
You will want your Realtor to be willing to negotiate several things. First of all, they need to be willing to negotiate the price of the home into the price range of your pre-approval. Secondly, they need to be willing to negotiate that the sellers pay 100% of your closing costs. Finally, they need to be willing to negotiate a contract long enough to get a loan with zero down payment. The USDA guarantee program, for instance, can take up to 60 days to close. If your Realtor is not willing to make these negotiations happen for you, then find another one.
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The last step is the hardest of all of them. Wait. Yes, wait. Then be ready to wait some more. You will fill out a lot of applications, and turn in lots of paperwork, and then you will wait. First you will wait for the sellers to accept your price and terms. Then, you will wait for a credit approval from the bank. Then you will wait for appraisals and inspections. Then you will wait for any underwriters to approve your home loan. If you choose to do the USDA loan, after the bank approves you, you will have to wait for the USDA local office to approve the guarantee.
It is a long and drawn at process. But in the end you will have the home you always wanted with a home loan that met your needs of requiring zero down payment!
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Tips & Warnings
When getting your pre-approval, don't use a mortgage broker. They often charge to much for a service you can do on your own by meeting with a loan officer at a bank.
If you choose to with the USDA Rural Development home loan guarantee program, make sure the lender you choose is willing to do this type of home loan.
Make sure the loan officers at the bank you choose are very familiar with the USDA type home loan guarantees. This makes the process so much more painless.
