When you are buying the house, it’s an expensive adventure by itself: upgrades, repairs, new furniture, landscaping, appliances, and all, cost a lot of money, and the last thing you want to imagine is to move into the house with empty bank account. That’s why many borrowers are putting only small amount of money or sometime nothing at all down on the house. In addition, with the rate of housing appreciation as high as we’ve seen in the last five years, many shrewed customers prefer to “leverage” their funds when they buy their home, i.e. why to put money down, if you can buy the house with nothing down, then sell it two years later with hefty profit, and use it to buy a bigger house, or invest the profits into the stock market.
One of the terms you might have heard of notorious PMI – Private Mortgage Insurance. If your loan to value ratio is 80.01% or higher, you may be subject to PMI or higher rates that already factor PMI into the rate. PMI is benefiting the lender only, doesn’t give you any protection at all, and it’s not tax deductable. To avoid this pesky “benefit”, ask us about our “PMI Buster” loans.
BEST LOAN CHOICES:
6-months to 3-year Hybrid ARM loans, including Interest Only, negAm or “Cash Flow” option ARMS’s, HELOC’s, 80/20 “piggy-back” combo loans. Use prepayment wisely: if you are not going to refi or sell the house in two years, take a two year hard prepay option to lower your interest and payments.