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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.)


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.

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Read all 22 posts in the same category of Home and Mortgage:

A New Way to Hedge Your Home's Paper Profit - Dec 12, 2004
California, U.S. in a Housing 'Bubble,' UCLA Forecast Says - Dec 11, 2004
21st-Century Landlords - Dec 10, 2004
Get Real About Real Estate - Dec 09, 2004
Can There Be Too Many Homeowners? - Dec 06, 2004
Selling Your Home - Dec 06, 2004
Conforming Mortgage Loan Limits Rise For 2005 - Dec 04, 2004
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