November 20, 2004 06:55 AM

The High Earner/Poor Saver


Excerpt: Surprisingly, there are even rare cases of getting 100% financing without paying for expensive mortgage insurance. (Mortgage insurance covers the lender in case you decide, having put nothing down, to walk away from your loan. On a $100,000 loan, a policy will cost you about $52 a month.)    News Source


What You Want: Only a few years ago you had practically zero chance of getting 100% financing. Lenders were so nervous about it, the option wasn't even on the menu. But the refinancing boom of 1993 changed all that. Many potential refinancers had lost equity in their homes. When lenders realized that didn't automatically make these people bad credit risks, many started taking a chance on them -- and they're still doing it today.

Surprisingly, there are even rare cases of getting 100% financing without paying for expensive mortgage insurance. (Mortgage insurance covers the lender in case you decide, having put nothing down, to walk away from your loan. On a $100,000 loan, a policy will cost you about $52 a month.)

The money in 100% financing these days usually comes bundled as a so-called 80-20 loan, or "piggy-backed second." That is, there's a first mortgage for 80% of the total and a second mortgage for the remainder. The bad news is that both come at astronomical rates. If you have anything to put down -- even 3% -- you'll save yourself a bundle. That's because Fannie Mae has standardized the lending criteria for 97% financing and will now buy these loans, which means that practically every mortgage lender can offer them.

Where to Shop: In situations that are, shall we say, "odd," you're often best off visiting a mortgage broker. These people act as agents, directing you to a lender and then collecting a fee or a percentage of your loan amount. The fee is the key: They don't get paid unless you get a loan. It's critical, though, to choose only a broker that comes highly recommended -- and the recommendation should come from a friend or colleague who has actually used the broker, not from your real estate broker or builder. Clients who use mortgage brokers complain, for example, that brokers say they're canvassing a dozen or more sources when they've really only checked with two or three. Other grievances: Brokers tend to throw business to the lenders who are their friends, and they can slow the mortgage process, making you wait for details about the terrific rate they've gotten you until it's too near closing to shop anywhere else.



Home Equity For The Holidays? OK, With Caution. (November 25, 2004)
This season, many consumers will charge against the home for the holidays. They will use home equity debt to pay for gifts and travel. Some will do it directly, paying for presents and airline tickets with charge cards tied to home equity lines of credit ...
Does It Pay To Save? (November 23, 2004)
Remodeling is expensive. I can often help my clients manage costs, but not always in the ways they expect. Most of my clients have been told they can save money on a project by doing part of the work themselves or by cutting corners on ...
Six-Figure Zip Codes (November 20, 2004)
NEW YORK (CNN/Money) - You've driven through some of these places, the bucolic, leafy suburbs where every house is huge, every driveway circles to the entry portico, and every yard is kept manicured more neatly than your Aunt Tilly's parlor. You think, "Boy this must ...
Buyer's Home Feature Preferences Reflect Lifestyles (November 16, 2004)
WASHINGTON (October 28, 2004) – Younger buyers care more about closeness to schools, parks and playgrounds, while older buyers are more interested in a bedroom on the main level and prefer single-story homes, according to a new survey on home buyer preferences by the National ...

Read all 15 posts in the same category of Home and Mortgage:

12 Tips For Wise Use Of Equity - Dec 01, 2004
Housing Wealth Reverberates - Nov 30, 2004
More Mortgages To Be 'Conforming' - Nov 30, 2004
Realtors Engage In Turf Battle With Discounters - Nov 28, 2004
Expanding The American Dream Commitment - Nov 26, 2004
'Tis the Season to Fix Up Your House - Nov 26, 2004
Sell Your Home — Fast - Nov 26, 2004
Most Expensive Gated Communities In America 2004 - Nov 26, 2004
Exchanging Real Estate Tax Free - Nov 25, 2004
Home Equity For The Holidays? OK, With Caution. - Nov 25, 2004
Does It Pay To Save? - Nov 23, 2004
Six-Figure Zip Codes - Nov 20, 2004
Buyer's Home Feature Preferences Reflect Lifestyles - Nov 16, 2004
Pattern of Strong Home-Price Gains Continues in Most Metro Areas - Nov 16, 2004