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The Return of the Zero Down Payment Mortgage

Young people are understandably in a panic about the economy. No matter how hard they work, they cannot afford anything. A good month is when you can keep up with payments on your buy now pay later (BNPL) installments on last month’s groceries. Your friends would let you stay with them, but your friends’ landlord is strict about how many people can live in the apartment, and you are not on the lease.

Homeownership still buys you financial stability that renting a fancy apartment while you have many thousands of dollars in the bank cannot. For now, you are packing up and moving in with relatives who own their house, since you are fortunate enough to have relatives in this situation. If only you could be a homeowner, and have a source of generational wealth for your children and a hookup to home equity line of credit (HELOC) funds to bail out your siblings and friends. 

It is easy to see why people would be tempted to take out a 0% down mortgage, but anyone who lived through the 2008 housing market crisis is understandably wary. If you are considering borrowing a 0% down mortgage and need to hear from the voice of reason, contact an Oakland lawsuits, collections, and creditor harassment lawyer.

The Best-Case Scenario With 0% Down Mortgages

At first glance, 0% down mortgages sound like an ideal solution to the housing affordability crisis. Imagine if all of those people who are paying rent every month because they could not afford a down payment were instead building up home equity with each payment. They could immediately become the crash pad of family stability, and within a few years, they could qualify for HELOCs. Unfortunately, a zero down payment mortgage is not simply an FHA mortgage with a smile and a signature in place of a down payment.

The currently extant species of 0% down mortgage is offered by United Wholesale Mortgage. When you take out a 0% down mortgage from UWM, you must also take out an interest-free loan from UWM in the amount of 3% of the home’s value. You must repay this loan, let’s call it the premature reverse mortgage, when you sell the house, refinance the mortgage, or pay off the house in full.

It is not so bad, assuming that you do not suffer any financial setbacks and your house appreciates in value. In the best-case scenario, you just end up making a smaller profit when you sell the house or refinance or have to repay an old debt when you pay off the mortgage.

You Know You are in Trouble When You Have to Take on More Debt Just to Get a Mortgage Loan

The worst thing about zero down payment mortgages is that the only people who borrow them are people who cannot afford a down payment. In other words, they are already financially vulnerable. As soon as interest starts accruing, their mortgages are already underwater. You do not need a lot of money to get a zero percent down mortgage, but you need a whole lot of optimism.

Contact the Law Office of Melanie Tavare About Staying Out of Trouble With Mortgage Loans

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


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