When 100% Financing for a Home Makes Sense
By HiLine Hal
This post was originally published on July 21st, 2015, and last updated on Feb 5th, 2021.
Some people mistakenly believe it’s always better to put 20% down on a home. When buying a new construction home, it’s often wise to take advantage of 100% financing. During the housing decline, some people found themselves underwater on mortgages. But owing more money on a home than your home is worth only happens during a housing decline. When home values go up, your home equity also goes up. The No. 1 reason to take advantage of 100% financing is the low-interest-rate environment. When you build a home on your lot with HiLine Homes in the Pacific Northwest, you receive exclusive financing.
When you buy new
Experts say many people prefer to own homes that are new or less than 10 years old. If you are buying an older home, go ahead and put money down in case the value decreases. With a new home, you don’t have to worry about things breaking or needing to be repaired right away.
When interest rates are low
It’s better to put as much cash down as possible when interest rates are high. With interest rates still at historic lows, you have the unique opportunity to lock in the savings. With 100% financing on a home, you can free up your cash to spend on upgrades, new furniture or to keep in an emergency savings account.
When you want to leverage your money
If you have money invested in the stock market making double-digit returns or earning dividends, it’s often prudent to leave it there. Also, you might have other high financial priorities such as buying a car or paying for college. If your mortgage rate is lower than a car loan or college loan, it’s better to get 100% mortgage financing.
When you own your own lot
If you own your own lot, you are in a better position to receive 100% financing. Lenders realize a person who builds on their own lot is financially responsible.
At HiLine Homes, we work with approved lenders who offer 100% financing packages. Talk to our home consultants about lenders who will get you into a home with no down payment. For more information on 100% financing, please contact us.