Zero down home loan-ankit oct
Home loan is type of loan which is taken from financial institutions by one who is not able to afford the cost of the house. There are many private as well as government institutions which provide home loan at low interest rates. In this world of growing competition every firm is truing to provide loan at cheaper interest rates and with minimum down payments.
Now, one need not to save money just for paying down payments one can easily avail the house by just paying the installments at the end of every month. Down payment is generally what a person pays at the time of buying the house this payment is made in partial and the balancing amount is paid later. Down payment is generally done to assure the seller that the house will be later purchased by the person who pays down payment. Down payments actually make the asset more expensive which would cover the interest on it. Generally the amount of down payment is 5-25% of the total asset cost. The remaining amount would be later recovered by lender through mortgage asset.
The concept of zero down payment was introduced in the year 2004, and the act was passed known as zero down payment act, 2004. The FHA has been given up the responsibility for the security of the lender, and it is obvious that the risk is more on the lender as compared to borrower as the down payment is not made, normally 3% down payment is required by the FHA but now one needs not to pay down payment.
Consequences :-
One came across the incident which took place in US in the mid of September many financial institutions were just providing loan by accepting the mortgage and suddenly the real estate sector went down and major loss was suffered by financial institution. As a result the economy of US was ruined. With the home loan rates ever increasing in US now even zero down payments is not beneficial to the borrower.
Qualifications of Zero down Payment:-
If one wants to avail the facility of zero down payments one has to be first qualified for that. There are certain qualifications required which would include the borrower of loanshould have an excellent credit history, one will be required to disclose all the current liabilities and it should not be huge, one should ensure to the lender that he was employed for at least 3 years in past, and in future he will be employed this is to ensure lender that one will be able to pay for the house purchased, the financial ability should also be sound so that in future no situation of default is raised.
Benefits:-
The concept of zero down payments is very useful to middle class people who are staying in a rented house, this will boost them to live in their owned home and they will have a feeling of security as they don't have to give down payment but have just to pay interest. It is approved bank program and so there is less possibility of fraud.
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