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Intrepid | A 100% mortgage means you get your entire cost of house covered by a mortgage. What about the Deposit? |
I was having this debate with friends... most mortgages are NOT 100%, in that they do not cover the entire cost of the house.
We were wondering about these rare mortgages that DO cover the entire cost of the house. Who is responsible for the deposit on the house, then? If it's the bank, then it's a bona fide 100% mortgage. If you still have to provide the deposit, then it's not a 100% mortgage, but a 80% mortgage (or whatever, depending on the size of the deposit)
Or are we missing something here?
Thanks. |
 |
 
TruthMastaT
 |
Yes, Virginia, there really ARE 100%-financed mortgages (and you're right -- that means NO MONEY DOWN).
To be more precise, I should say that there USED TO BE 100%-financed mortgage loans. No mortgage company would ever make a loan of that sort anymore (given the current mortgage "correction").
One of the many foolish mortgage loan products that were made during the "hey-day" of the subprime mortgage crisis was 100% Loan-to-Value (LTV) loans. In fact, some crazy mortgage companies even gave 105% LTV loans (yes, they got cash back! Unbelievable!)!
And you're right. Most mortgages are not 100% LTV (and NO newly closed loans anyway). Any loan with an LTV or 80 or higher is considered a risky loan.
Hope that helps.
Good luck! |
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Gerald
|
Yes - you are missing intelligence.
A 100% mortgage clearly doesn't require a deposit to be paid by the purchaser. |
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ascoile
|
100% means 100%
The deposit is covered, you get a loan for the full amount
If there was a deposit on top it would be more than 100% and that isn't possible is it? |
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ukok
|
You are getting your knickers in a twist. A 100% mortgage does not involve a deposit. Example you pay 100k to buy mr jones house. Your bank lend you 100% ie 100k. You pay no deposit only fees, legals etc. |
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TallPaul
|
No, you are correct.
If you pay a deposit, it isn't a 100% mortgage. |
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Cari
 |
The bank pays the deposit, so it is a bonafide 100% mortgage. You pay nothing on the house. But you will still need to cover legal fees, survey costs, and anything along those lines ...
... HOWEVER, it doesn't matter now does it? Whilst 100% mortgages have never been a good idea in case the house decreases in value and you end up with negative equity, they are now NON-EXISTENT in the UK - heard about the credit crunch? Right now there is not one bank or building society that will give you one. |
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rhsaunders
 |
If a mortgage actually covers the entire price, any deposit would go toward closing costs: title insurance, mortgage "points", pro-rated taxes and utilities, recording costs, and other nuisance charges. But the mortgage crash has made such mortgages nearly unattainable. |
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Tiss
 |
If it's a 100% mortgage, there is no down payment (if that's what you mean by deposit). If you are referring to earnest money, that is the repsponsibility of the buyer, but it is usally a token amount - maybe $1000. or so. That is applied to the final settlement, at closing. |
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Marky
|
No deposit required.
The banks assumed that the house would be worth 10% more in 6 months. If they couldn;t keep up with payments, then the woudl reposses, and easily cover thier costs.
Now, prices are coming down and banks are realising it was a stupid mistake that is costing them, and ultimately all of us, billions. |
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AnnOnnyMouse
|
I'm not sure about the finer points, but I have heard that a 100% mortgage is not a good idea because if property prices fall you will be one of the first to find yourself in 'negative equity'. |
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Jimmy
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Intrepid! Most banks will not tell you the whole story. You have to ask around untill u get best deal. Ask the bank or martgage co. to see what they ofter. There are hidden cost that they don't want you to know. Take care! Jimmy. |
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Butternut27
 |
100% mortgage would cover the deposit...end of....
80% mortgage means you pay 20% as the deposit..end of...
where you and your friends sharing a bottle of wine by any chance? |
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Copper
|
100 per cent covers the entire cost of the house. There is no additional deposit. |
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Osei A
|
For a 100% mortgage, there is no deposit to the buyer (the bank bears all).
The reverse would also be true - if you are paying a deposit, then you are definitely not getting a 100% mortgage.
So yes, yes, yes, you can tell your friends you were right/ |
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Amanda 88
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100% mortgage means exactly that ... no deposit needed
I've had them in the past, don't think they are easy to get now |
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a_khaze
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When you put a deposit and get a 100% mortgage you walk out of the closing with a check in your hand for the amount of the deposit less the closing costs that you are responsible for, ie appraisal, points, lawyers fee.... |
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Amz
|
no you would not require a deposit just money to cover fees, if a lender agreed to a 100% they will pay the entire amount the property is worth. you used to be able to burrow up to 125% of the property value these are risky as you can end up in negative equity if your property decreases in value, you will most definitely require a deposit the way the market it is now. If you don't have one some builders or housing associations offer gifted deposits but new build houses are usually way over priced and you generally won't make any money on it when you come to sell on ... good luck |
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Amazingwoo
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The 100% includes the 10% deposit.
These deals are so rare now, some banks are now wanting 25% deposit off buyers. |
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