MI No Money Down Mortgage – approved loans with no cash down?

Wanting to purchase a home but lacking enough cash to make the 20% down payment is like standing at the window of a candy store and not being able to go in and buy that favorite chocolate bar. Every day living expenses take precedence and can eat up the chances of moving into an affordable home. Nevertheless, lenders are now able to offer loans that require no down payment, loans like the Michigan No Money Down Mortgage. Of course there’s a catch involved, to answer that burning question; and it’s this: in lieu of the down payment the borrower must pay Personal Mortgage Insurance (PMI) to insure adequate repayment in the event of loan default. Higher interest rates will apply with this type of loan since there is no down payment to reduce the price of the home and the borrower is responsible for 100% of the loan. PMI is also expected until 20 % equity is amassed. 

The terms of a MI No Money Down Mortgage are somewhat different that that of many other mortgages. Instead of fixed rate or adjustable rate interest, many MI No Money Down Mortgages are made up of a combination of the two. Fixed rates will apply for the first phase of the loan and will be replaced by variable rates for the remainder of the term. Again, the reason for these terms is the lack of up front cash to secure the loan. Another way to work the MI No Money Down Mortgage is for the lender to issue two simultaneous loans, comprising of one that equals 80% of the selling price and a second, smaller loan (with higher interest rates) that makes up the other 20%. The positive side of two simultaneous loans is elimination of the need for PMI and monthly payments will be no higher than a conventional 20% down loan. On the negative end, two sets of closing costs are needed because there are two separate loans, but even that amount is less than the 20%. Don’t wait outside any longer; step inside and get ready to enjoy some ‘candy!’

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