This Mortgage Is Scary! (Part 1)

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[donadeavera]

Dont all mortgages have to be repaid when you sell your house? Otherwise banks are losing a lot of money.

[theotherdonald]

You have to pay off ANY mortgage when you sell your home.

[elijahmonster]

Isn’t this the requirement of all mortgages: that the mortgage repaid when the property is sold or financed? It seems like the billionaire is doing a huge favor and helping a whole Lotta people by not charging interest.

[alexknaus]

Most down payment assistance programs are this way. Why are you shocked? You are financial pros? The assistance is a second lien and yes has to be repaid one way or another. This is not new FYI

[williamfranklin]

In 2005 my wife purchased a home 80% first mortgage, 10% second mortgage, 10% down payment. She had to pay PMI until the second motrgage was paid off. It cost more than 20% down but she had purchased rather then renting.

Side note, 2008 the house lost 20% value but we were still able to pay the mortgage so no big deal. Today its worth 25% more then she paid.

[wulfseig]

Wait, what am I not understanding. When you sell a house with a balance on a mortgage. That balance gets paid. Maybe they mean balance + interest has to be paid? I don't get it?

[scottgriz]

This is known as a piggyback mortgage and it allowed my wife and I to get into our first home. We refinanced soon after and lowered our rate and combined into a single mortgage and were able to drop PMI because we now had an 80% LTV. While I know you don't recommend buying with anything but 20% down, it's not always possible to have a choice if rents are hard to come by and home choices are scarce.

[thundergauntlet]

Sounds fine to me. It's literally 0% financing. Sure, it would be better to hear that they encourage borrowers to pay a standing order into a 'savings' (escrow) account as part of their financing to help plan for the eventual repayment, but this sounds completely fine, especially for first-time buyers.

[hyperbyer]

The audacity to make you pay off a 0 interest loan when you sell is unreal!

[medusamedia]

They make this sound more complicated than it is.... Basically what they're offering is your 3% down payment; can be financed if you don't have enough to put down. That way you can get into a home without the restriction of having a large down payment

[svetlanazusman]

Why is this bad? You have to repay all mortgages when you sell your house usually.

[juniorelleston]

It’s good to see everyone in the comments asking the same question. This sounds better than all FHA loans. I had two mortgages on my FHA loan as well and is just fine. This sounds better than what I started with so I don’t see what the bad part is

[josephbarker]

That's just like all mortgages. A prison that you pay to live in.

[kokomobethany]

A second mortgage with zero percent rate that you pay off at the end is exactly what a partial claim is, and that is a pretty standard option for people who are in default to help catch them up on their mortgage.

[thomas]

That’s a very common occurrence. Many states host similar programs. Usually called first time buyer assistance or the like

[grahamrussell]

0% down, 0% interest mortgages, please expand into the UK, I'll gladly sign up.

[Challengecook]

1). All mortgages have to be paid when you sell the house. You pay off the loan they approved you for on your house. That’s how the title is transferred.

2) if you don’t have a 20% down payment you have to pay mortgage insurance. This is an extra fee until you have paid 20% of the mortgage.

So you pay the mortgage insurance or you get a second mortgage to pay the 20%. Either way the banks get their money.

[LCplLudwig]

I am for whatever reason either misunderstanding you or this is fear mongering.

[Ballinhard]

That's why I hate the term homeowner. Im $230k in debt on the house Im paying the bank back for, it's mine on paper but not if I don't make every payment for 30 years

[DarinPirkey]

The real issue is that people can get into a home who can't even save $15k. That means these homes are likely to go into default since the homeowner will have zero equity. Same thing happened during the 2008 crash.