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The 100 Loan is one of the most popular refinance options available to home buyers in the current marketplace. This loan has been created for first time home buyers with bad credit. As one of the most attractive programs offered by the federal government to stimulate the economy, millions of these same buyers will benefit from this program.
The 100 Loan was created through the Making Home Affordable Program (BMAP) initiative. The purpose of the program is to help prevent home foreclosure through refinancing or second mortgage insurance protection. In general, first time home buyers and refinance borrowers can qualify for either a fixed rate or an adjustable rate mortgage (ARM). However, there are certain terms and conditions that must be met before a buyer may receive either option. Income and sales price restrictions apply to both.
The primary benefit of the 100 Loan is that it can provide short term cash to help buyers avoid the costs associated with home purchase loans. For those who qualify, the financing available through this program can provide cash to make down payment, pay closing costs or reduce payments. The primary reason that income and sales price restrictions apply is to prevent borrowers from taking advantage of any potential benefits from refinancing or second mortgages. The restrictions also prevent borrowers from using the funds to pay for extravagant items such as vacations or second homes. Borrowers who use the funding for these purposes are restricted to using the funds for three years.
In addition to providing cash to buyers, the 100 Loan is also a good option for borrowers who have experienced a decline in their financial situation. Those who have opted for refinancing but are now struggling to make the payments can benefit from this option. Those who are facing a future with declining income can also benefit from the refinance, as they can use the extra cash to help make ends meet. As income declines, more borrowers may find it difficult to make mortgage payments, which will again lead to more homeowners being forced to look for refinance options.
If the borrower has experienced a substantial drop in income and sales price since purchasing a home, then refinancing may be a good option. Borrowers should take a close look at the property they wish to purchase along with their credit report to determine their creditworthiness. After determining their creditworthiness, they can begin looking at the various financing options available. The main benefit of the 100 Loan is that it can provide cash to help buyers avoid closing costs or reduce payments. Those who use the financing for these reasons are not subject to the income and sales price limitations, which make this an excellent choice for homeowners in need of quick cash.
In addition to providing cash to buyers, the 100 Loan is an excellent option for first-time home buyers. First-time home buyers can use the cash obtained through mortgage insurance to cover closing costs and reduce monthly payments. This gives first-time home buyers the opportunity to purchase their dream home. Mortgage insurance premiums do not vary based on the loan amount or down payment, and in most cases, a lower cost will mean a lower monthly premium. In essence, the lower the monthly payment, the greater the chance you can pay down your mortgage and leave owning a home you can be proud of.