Expert Bankruptcy & Debt Relief Insights

In the game of personal finance, the grand prize is to own a house with a paid-off mortgage. Therefore, in the game of creditworthiness, a home mortgage is a grand prize. The easiest way to get a mortgage with a monthly payment that the lender is sure you can afford is to place a sizable down payment. It is almost impossible to gather the funds you need for a conventional mortgage, typically 20 percent of the sale price, unless you have just sold another real estate property. If you have never owned real estate, your best hope of getting a mortgage loan is an FHA, VA, or USDA mortgage. These mortgages exist through federal programs that aim to make mortgage loans available to people who would not otherwise be able to afford them. Sometimes it is even possible to get a home mortgage loan with no down payment at all, but this is as risky as it sounds. If you are underwater with a zero down payment mortgage loan, contact an Oakland lawsuits, collections, and creditor harassment lawyer.

Zero Down Payment Mortgages are a Golden Opportunity if You Can Get One

VA mortgages are only available to military veterans, and USDA mortgages are only available to people who are buying real estate in rural areas. VA and USDA are the only federal mortgage programs that offer the option to borrow without placing a down payment. Therefore, if you are a city dweller who has never been in the military, your chance to get a zero-down payment mortgage exists only in your dreams. If you are generally eligible for a VA or USDA mortgage, you can only obtain the zero-down payment option if your credit score is at least 620. If your credit score is lower than that, you might still be able to get a VA or USDA mortgage, but you will need to place a down payment.

How to Get in Trouble With a Zero Down Payment Mortgage

Buying a house without placing a single penny as a down payment feels like an extraordinary stroke of good luck, but zero-down-payment mortgages are plenty risky. First, the monthly payments are higher than they would be if you had placed a down payment, because you are borrowing the entire value of the house at the time of purchase. This means that, if your paycheck arrives late just once, there is a risk of missing a mortgage payment. Even worse, you start with zero home equity, and in the beginning, only a few dollars from each monthly payment go to home equity. If your house declines in value even a little bit, you can quickly end up with negative equity, where you owe more than the value of the house, so you cannot break even if you sell it.

Contact the Law Office of Melanie Tavare About Coping With a Precarious Financial Situation

A debt relief lawyer can help you if you are struggling after borrowing a zero-down payment mortgage.  Contact the Law Office of Melanie Tavare in Oakland, California, or call (510)255-4646 for a case evaluation.