Buy a Home 0% Down Purchase Program
Buy a home with 0% down, In this article, we will delve into the details of this program, its terms, and conditions, as well as the benefits and potential drawbacks.
Program Overview
The second lien down payment assistance program is designed to provide borrowers with a helping hand in meeting the required down payment for their home purchase. This program offers a second lien against the subject property, which bears a 0% interest rate and has a maximum loan amount of $15,000. This means that borrowers will not be charged any interest on the second lien, making it a more affordable option.
Terms and Conditions
The second lien has a term of 360 months, which is equivalent to 30 years. During this period, there are no minimum monthly payment requirements, making it easier for borrowers to manage their finances. However, it’s essential to note that the second lien is fully due upon the occurrence of certain events, including:
- Refinance of the first lien
- Payoff of the first lien
- Final payment of the amortization schedule of the first lien
This means that borrowers will need to make a balloon payment when any of these events occur.
To qualify for this program, borrowers must meet the guidelines set by Home Possible or HomeOne. These guidelines include credit score requirements, income limits, and other factors that determine a borrower’s creditworthiness. Some exclusions may apply, so it’s crucial to review the program’s terms and conditions carefully.
Example Scenario
Let’s consider an example to illustrate how this program works. Assume a borrower wants to purchase a home with a $350,000 price tag and a 30-year fixed-rate loan at 6.999% interest. The loan-to-value (LTV) ratio is 97%, which means the borrower needs to make a down payment of $12,950 (3% of the purchase price).
With the second lien down payment assistance program, the borrower can receive up to $15,000 in assistance, covering the entire down payment. The principal, interest, and mortgage insurance (MI) payment for the first lien would be $2,433.32. The annual percentage rate (APR) is 7.528%, with estimated finance charges of $6,500 over the life of the loan.
Important Considerations
While this program offers significant benefits, there are some essential factors to consider. The principal and interest payments mentioned above do not include taxes and home insurance premiums, which will result in a higher actual monthly payment. Additionally, the borrower will need to make a balloon payment when the second lien becomes due, which could be a significant financial burden.
Conclusion 0% Down
The second lien down payment assistance program offers a valuable opportunity for borrowers to achieve homeownership with a lower down payment. However, it’s crucial to carefully review the program’s terms and conditions, including the 0% interest rate, no minimum monthly payment requirements, and the balloon payment upon the occurrence of certain events. By understanding the ins and outs of this program, borrowers can make informed decisions and plan their finances accordingly.
