If you think that your scarcity of funds will not allow owning a house, think twice. This is because there are other options than the conventional loan taking. You can opt for low or no down payment mortgage. Some institutions even allow the consumers to borrow up to 105 percent of the purchase price of the home, so that their closing costs could be financed. Very few lenders offer zero down payment mortgages now, but there exists programs that allow the consumers even with bad credit scores to apply for a mortgage without having to make a down payment.
Also Read : Will bad credit affect my mortgage renewal?
Sometimes you might hear about mortgage refinancing with a bad credit score. This is done to reduce the interest rate that is being paid and to save the money. There are many cases in which refinancing in middle of the mortgage loan is good, as a better rate is obtained or a high rate debt can be consolidated. Other situations like facing a foreclosure or a power of sale scenario can also prompt refinancing a mortgage loan with bad credit. The Canada government has devised many zero down payment mortgage programs. Some of the programs adopted in Ontario are as follows:
- VA Loans: Also known as Veteran’s Affairs mortgage loans, these loans are specifically meant for the veterans, the current members of the defense personnel and their spouses. These loans do not require down payment or mortgage insurance.
- State and local home buyer programs: These programs encourage home ownership. They are area specific and should be searched for to avail the advantage.
There are various banks and credit unions as well who offer mortgage loans with no down payment. These loans are only available to those borrowers who at least satisfy the limited income requirements; say for example 80 percent of the median area income.
If you happen to find yourself facing foreclosure, much of the stress can be reduced by applying for a second mortgage loan that will help you to pay off the first mortgage. The idea is to help you in arranging the funds needed, and to catch up with the bills without increasing the monthly expenses. Mortgage brokers and lenders are of great help in this regard.