95 Mortgages is another name for loans than require 5% down payment. Thus you are financing 95% of the purchase price. These loans are now the becoming the most sought after loans for buyers seeking a low down payment when purchasing a home.
If you have spoken to any lenders you may have heard the term LTV. LTV is the loan-to-value ratio. The value is referring to the purchase price of the home. 95 mortgages would have a 95% LTV. 95 mortgages are beneficial to first time buyers. These buyers normally have recently graduated from college and are just starting their first job. Thus they have limited savings and are looking for cheap home loans. The low down payment of 95 mortgages is a great option for these buyers to be able to get into their first home.
During the real estate boom of the early 2000s lending criteria was very loose. There were numerous lending companies offering zero down payment or 100% home loan programs. In fact there were loan programs that allowed buyers to receive money back to closing. Landlords often were losing prospective tenants since many people found it required more money upfront to rent an apartment than to purchase a home.
Now FHA financing will allow buyers to purchase home with less down payment than the 95 mortgages. Typically with FHA financing you will only need to put 3.5% percent down. If your credit is less than perfect than FHA financing would be the best chance to get approved for a loan.
For first time buyers with good credit but limited funds 95 mortgages are the best of the cheap home loans.
Jordan Martin is an expert on residential real estate and finance. She invites you to learn more at 95 Mortgages and Cheap Home Loans.
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