Zero-Percent Down Mortgage Program

SOURCE www.cnn.com
United Wholesale Mortgage launches a zero-percent down mortgage program, allowing homebuyers to pay 97% of the home's value with a first mortgage and the remaining 3% in a second mortgage, with concerns raised about potential risks similar to the subprime mortgage crisis.

Key Points

  • Program launched by United Wholesale Mortgage
  • Homebuyers can pay for 97% of the home's value with a first mortgage and 3% in a second mortgage
  • Second mortgage needs to be paid back in full as a balloon payment when the home is sold or refinanced
  • Concerns about risks similar to the subprime mortgage crisis

Pros

  • Allows homebuyers to purchase a home without a down payment
  • Helps individuals who cannot afford a traditional down payment to access homeownership

Cons

  • Homeowners starting with no equity could be at risk if home prices drop
  • Potential for homeowners to be underwater on their mortgage if values decrease