PRINCETON, N.J., June 21 /PRNewswire/ -- The no-money-down mortgages made popular by low interest rates and a healthy housing market can be a valuable investment tool-but they also are a gamble-according to RealEstateJournal.com, The Wall Street Journal's guide to property.
"First-time owners who don't have the cash for a down payment can still buy a home with 100% financing," says Valerie Patterson, senior producer, RealEstateJournal.com. "However, if you finance your home with no down payment, you have no equity-if housing prices fall, you could owe money when it's time to sell."
Some homebuyers choose 100% financing in the hopes of jumping into, and profiting from, the hot housing market. But even if your home goes up in price, the cost of other homes you might want to purchase also will increase. RealEstateJournal.com says one way to come out ahead is to move to a cheaper housing area or downsize. You could make money if your home appreciates in value and you relocate to a less expensive locale.
RealEstateJournal.com suggests you consider these facts when looking for a mortgage:
* Your mortgage choice should depend on your tolerance for risk and how
long you plan to stay in the home.
* If you only qualify for a high-rate mortgage because you lack a credit
history, establish a financial track record before buying.
* Interest-only loans are a good choice if you need lower initial
payments, but they often come with significantly greater private
mortgage insurance.
* Because they have no equity, consumers using 100% financing could end up
owing more than their homes are worth with even the slightest downturn
in property values.
For more information on real estate, visit http://www.realestatejournal.com/.
About RealEstateJournal.com
RealEstateJournal.com, The Wall Street Journal Guide to Property, is the Internet's premier site for people seeking real estate guidance for both commercial and residential properties.
About Dow Jones & Company
Dow Jones (NYSE: DJ; http://www.dowjones.com/) publishes the global Wall Street Journal with its international and online editions; Barron's; the Far Eastern Economic Review; Dow Jones Newswires and Indexes; MarketWatch; and Ottaway newspapers. Dow Jones co-owns Factiva with Reuters, SmartMoney with Hearst and CNBC television operations in Asia and Europe with NBC Universal.
