Skip to comments.No-money-down mortgages are back
Posted on 02/01/2013 12:24:30 PM PST by grundle
Its 100% financingthe same strategy that pushed many homeowners into foreclosure during the housing bust. Banks say these loans are safer: Theyre almost exclusively being offered to clients with sizable assets, and they often require two forms of collateralthe house and a portion of the clients investment portfolio in lieu of a traditional cash down payment.
In most cases, borrowers end up with one loan and one monthly payment. Depending on the lender and the borrower, roughly 60% to 80% of the loan can be pegged to the homes value while the remaining 20% to 40% can be secured by investments. On a $2 million primary residence, for instance, the borrower could get a $2 million loan, which would require a pledge of assets in an investment portfolio to cover what could have been, say, a $500,000 down payment. The pledged assets can remain fully invested, earning returns as normal, without disrupting the clients investment goals.
While these affluent clients may be flush with cash, this strategy allows them to get into a home without tying up funds or making withdrawals from interest-earning accounts. And given the markets gains combined with low borrowing rates in recent years, some banks say clients are pursuing 100% financing as an arbitrage playwhere the return on their investments is bigger than the rate they pay on the loan, which can be as low as 2.5%. Some institutions offer only adjustable rates with these loans, which could become more expensive if rates rise. In most cases, the investment account must be held by the same institution thats providing the loan. See: Home improvement gets a makeover
(Excerpt) Read more at marketwatch.com ...
better than renting...you get all the deductions...and can scr** anytime you please because the equity will be zip.
The $6 Trillion is deficit spending had to go somewhere.
Welcome to the obama housing bubble v2.0
Definition of Insanity: doing the same thing over and over expecting different results. Hey, come to think of it this ALSO sounds like the definition of a Liberal.
“money down”=”redlining”= “racist!”
“no-money down”=”predatory lending!”
I’m not surprised —
Actually, this is probably the only method of no-money down that ought to be accepted. You show up and show a 401k account of $100k and $20k in a CD....promising to hand the whole thing over to them to manage and watch over...and I (the bank) offer you no-money down on a house (with a standard limit for your yearly salary). I certainly won’t be stupid and let you buy a $400k house with only $70k in yearly salary....but I’d let walk in to buy a $240k house very easily with this situation.
The point is...the folks who were wise to invest and save some money....ought to be people that you want to deal with. The guy who says....he has nothing in savings or a 401k, and wants a $400k house with nothing down and pay $2,750 a month on his payment? That’s a joke. We’ve got people doing the right thing in life....let’s reward them.
VA loans are 100%, so are we saying veterans make for terrible mortgage holders?
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