The no-money-down mortgage or the 100 percent financing loans have not totally been wiped off the market. Bankers are still offering these loans, albeit, only to wealthy investors exclusively.
Schemes offering 100 percent financing or no money mortgages are home loans that require little or almost no down payments during application. Around 60 to 80 percent of the loan amount is tagged to the home's value while the remaining is added to the customer's secured investments. The customer is only liable to make monthly mortgage payments toward the loan.
The loan not only eases home financing but also helps in saving taxes on capital-gains as the pledged investments need not be liquidated.
In 2006 and 2007, these loans were an easier option to fund home investing and buying. But, when the housing economy crumbled, lawmakers tightened lending rules and the 100 percent financing loans lost their luster. In fact, these loans were one of the major reasons that bust the real estate bubble, reportsMSN money.
However, these loans are back in the market again as demand for them is rising exponentially. Many lending institutions have reported significant increase in requests from clients to provide100 percent mortgage financing loans. Some banks are using the loans to lure in prospective customers, reports Market Watch.
But, are these loans restricted only to the rich? Yes. Not all people are eligible for the 100 percent financing loans. Only those customers who have an impressive financial portfolio can qualify for them. Banks also claim that these loans are a safer option when it comes to affluent buyers as repayment of the credit is guaranteed.
The basic rule about the comeback of no-money-down loans is: the weaker the borrower, the harder it is to get a 100 percent financing loan, reportsTruth about Mortgage.
For people belonging to a relatively lower income bracket, banks and credit institutions have introduced other attractive schemes.
Check out the list of low-down payment mortgage loans compiled by Bankrate.com .
