MortgagesUndressed

Question: I have enough money to make a 5% down payment and closing costs. What is the program to get the lowest payment?

Answer: The way to have the lowest payment is to use a negative amortization ARM. Most lenders want more than 5%, but in some markets you can find it with 5% down, providing you have good credit. This loan is risky in that you are making payments much lower than interest so you are building up your loan balance with each low payment. If your home doesn’t rise in value you could end up in a crippling financial situation.

Another way, less risky, to have low payments is an interest only program. You are not required to pay principle, but may. Some banks add to the interest rate to allow you to avoid mortgage insurance. This is often a good choice.

Larry Cragun