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Old 06-08-2018, 12:01 PM
 
570 posts, read 221,565 times
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I am on my third home bought with zero down. We did put down money for earnest and due diligence but with a good interest rate and no PMI on loans from our CU, there was no point in tying up our money when we could use to improve the house.

In all three instances, we have never defaulted or missed a payment. I think getting enough information from the lender to know that they looked closely at the applicant's financials and is truly qualified for the loan is the most important factor.

Last home we passed on a couple cash offers because the time to close was not important to us and we felt the offer who had been outbid on multiple other homes and who actually had their lender call our realtor to reinforce their qualification status and was willing to put up a lot of due diligence was a safer bet than someone who had cash reserves to lose a couple thousand in due diligence if we didn't come to agreement on repair negotiations.
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Old 06-08-2018, 12:36 PM
 
1,461 posts, read 330,127 times
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Quote:
Originally Posted by luckeeesmom View Post
I am on my third home bought with zero down. We did put down money for earnest and due diligence but with a good interest rate and no PMI on loans from our CU, there was no point in tying up our money when we could use to improve the house.

In all three instances, we have never defaulted or missed a payment. I think getting enough information from the lender to know that they looked closely at the applicant's financials and is truly qualified for the loan is the most important factor.

Last home we passed on a couple cash offers because the time to close was not important to us and we felt the offer who had been outbid on multiple other homes and who actually had their lender call our realtor to reinforce their qualification status and was willing to put up a lot of due diligence was a safer bet than someone who had cash reserves to lose a couple thousand in due diligence if we didn't come to agreement on repair negotiations.
You bring up an excellent point in that past paragraph. Not just sellers, but also cash buyers can dangle cash above your head and make you jump for it. The fact that someone went through the hoops to get financing means they WANT to buy something. And the preapproval is only good for 90-ish days. They're a motivated buyer.
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Old 06-08-2018, 01:18 PM
 
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I bought my current home with a VA loan. No issues with an appraisal. I will be selling and buying another home with a VA loan because of the lower rates. I don't see why a seller would care if the buyer has no money down. As long as the bank is good with it and the seller gets the asking price, who cares!
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Old 06-08-2018, 01:19 PM
 
Location: Miami-Jax
5,783 posts, read 6,335,815 times
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Zero money down could be subject to more stringent inspections. Also would suggest they have no money to put up should it be needed due to a low appraisal. In the vast majority of cases it won't make any difference to the seller, but since there is a chance it could have an effect then it does present a slight disadvantage to the buyer.
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Old 06-08-2018, 02:34 PM
 
1,461 posts, read 330,127 times
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Originally Posted by projectmaximus View Post
Zero money down could be subject to more stringent inspections. Also would suggest they have no money to put up should it be needed due to a low appraisal. In the vast majority of cases it won't make any difference to the seller, but since there is a chance it could have an effect then it does present a slight disadvantage to the buyer.
The home inspection is the same regardless of loan type, and the qualifying process actually less stringent for the buyer. Zero-down loans are to assist buyers in need, unlike how "0% financing" on new cars is more of a reward for well qualified buyers who don't need it.

Some "incentives" are need based, and some are merit based. It seems if you fall in the middle, you lose
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Old 06-08-2018, 02:43 PM
 
570 posts, read 221,565 times
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Quote:
Originally Posted by ddm2k View Post
The home inspection is the same regardless of loan type, and the qualifying process actually less stringent for the buyer. Zero-down loans are to assist buyers in need, unlike how "0% financing" on new cars is more of a reward for well qualified buyers who don't need it.

Some "incentives" are need based, and some are merit based. It seems if you fall in the middle, you lose
It is my understanding with 0% VA loans, there is a more stringent inspection process.

We did not encounter that because we did not have a VA loan but I have heard that the VA process can be a bit more complicated which can factor in if you need a quick close.

I am not sure about how difficult it was for us to qualify or not versus other loan products. We were drawn to the Credit union loan because the interest rate was based on the amount of down payment and no PMI.
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Old 06-08-2018, 02:54 PM
 
1,461 posts, read 330,127 times
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Originally Posted by luckeeesmom View Post
It is my understanding with 0% VA loans, there is a more stringent inspection process.

We did not encounter that because we did not have a VA loan but I have heard that the VA process can be a bit more complicated which can factor in if you need a quick close.

I am not sure about how difficult it was for us to qualify or not versus other loan products. We were drawn to the Credit union loan because the interest rate was based on the amount of down payment and no PMI.
Interesting! I've done a USDA, not a VA. How much lower than retail bank rates were you able to get with a credit union?
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Old 06-08-2018, 03:13 PM
 
Location: Back in the Mitten. Formerly NC
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I purchased a home with a 0% down FHA loan, $2K under asking, no seller assistance

Last year, I purchased a home with a 3% down conventional loan, paid over asking, no seller assistance


My opinion? You don't want my money? Your loss. Someone else will appreciate it.
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Old 06-08-2018, 03:39 PM
 
570 posts, read 221,565 times
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Quote:
Originally Posted by ddm2k View Post
Interesting! I've done a USDA, not a VA. How much lower than retail bank rates were you able to get with a credit union?
You know I don't think we got the lowest rate out there but I didn't check around too much. My credit union does not assign interest rates based on credit, they assign based on the loan type and the percentage of money put down. 0-10% gets the higher rate, 11-20% gets a lower rate, and 21% and higher gets the lowest rate. Having no PMI is also helpful.

We have a relatively high DTI due to student loans and some leftover consumer debt from when my husband was laid off during the recession and went back to school to change careers.

Our credit score is not bad but also not top tier due to the DTI (we have excellent payment history) so we would have not qualified for the top rates anyway.

My credit union considers existing debt and also carefully looks at payment history and income source and other assets for prequalification but either you have a credit score that approves or one that doesn't. I'm not sure their threshold on that because ours is not too low to be scary or where we otherwise have issue getting credit elsewhere.

Rent is pretty expensive in our area so it has been advantageous for us to own vs. rent because of the possibility of building equity and also not having to move each year or two when apts raise the rent. Plus we have three dogs so that is expensive and a bit much to put in a rental.
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Old 06-08-2018, 04:31 PM
 
1,461 posts, read 330,127 times
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Quote:
Originally Posted by jaynarie View Post
I purchased a home with a 0% down FHA loan, $2K under asking, no seller assistance

Last year, I purchased a home with a 3% down conventional loan, paid over asking, no seller assistance


My opinion? You don't want my money? Your loss. Someone else will appreciate it.
Yes, the Conventional 97 is a program to compete with FHA's 3.5% rule.

FHA can be net 0% as it allows the entire down payment to be a gift.
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