The 100% equity mortgage loans present a new strategy to
home-owners by helping them to borrow cash "against the full
value of the property." The homeowner may find it easy to take
out the 100% equity loan, since he may feel he is getting the
best deal. The 100% Equity Mortgage loans integrate the upfront
fees, including closing costs into the mortgage plan, thus the
borrower pays nothing upfront. Borrowers often choose this loan
when they do not have available funds to cover the upfront costs
on mortgage loans.
The downside is the 100% equity mortgage loans are similar to
standard loans, since the buyer is placing his home up for
collateral. First time buyers may want to consider the 100%
mortgage loans, since no upfront costs are needed; however, be
aware that risks out of the ordinary are involved. The 100%
Mortgage loans whether equity is involved or not looks at
"negative equity." If you take out the loan, and the value of
the property falls below the amount of money borrowed, then you
may face additional charges.
Many of these loans come with high interest rates and at times a
lender may require that the borrower agree to additional
stipulations, such as the "Mortgage Indemnity Guarantee." This
policy ensures that--one way or another--the lender will get his
money. If you fail to agree to the policy, the lender most
likely will deny your loan.
Finally, when consider loans, make sure you know what you are
getting into by reading all available information pertaining to
the loan. You will want to understand what all of the different
rates and fees will be-and how this will ultimately affect how
much you pay monthly and for the long term-by weighing out the
pros and cons before signing any permanent agreement.
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