For some reason I have been deluged with emails, tweets, and FaceBook posts touting ways for purchasers to buy homes with nothing down.
I have never made it a secret that I am not a fan of 100% loans. As a matter of fact I'm not crazy about any loan in which a borrower is required to insure part of the loan for the mortgagee. It a waste of money and it doesn't really help the borrower much in the event of default.
But the real reason I don't like no down-payment or low down-payment loans is that history has taught us that borrowers are all too willing to promulgate a strategic foreclosure if they don't have a lot of skin in the game.
A better strategy is to save a 20% down-payment that can reduce you payment by much more than 20% with the elimination of the mortgage insurance premium.
But it won't happen. Borrowers will continue to borrow 100% of their purchase price, pay ridiculous mortgage insurance, and then blame their loan officers and real estate agents when things go south.
If we don't learn from history we are doomed to repeat it.