Connect with us

CBS News

When does a no-down-payment mortgage make sense? Experts weigh in

Avatar

Published

on


Colorful House Objects On Blue Background
A no-down-payment mortgage loan could be a good solution — but only for certain types of buyers, experts say.

Getty Images


Between rising home prices and today’s high mortgage rates, buying a home has gotten very expensive. “Today’s home affordability is the worst we’ve seen since the early ’80s,” says Neil Christiansen, branch manager and certified mortgage advisor at Churchill Mortgage.

Meanwhile, inflation and high interest rates have made it difficult for many prospective buyers to save up for a down payment. If you were putting down 20% on the average US home, you’d need nearly $88,000, according to Redfin data.

However, you don’t always need to put down 20% on a home purchase. You might not even need to pay any money upfront. While not as widespread as traditional mortgages, no-down-payment mortgages do exist and could be helpful for some prospective buyers. However, these types of mortgage loans may not make sense in every situation.

Ready to buy a home? Compare your top mortgage loan options now.

When does a no-down-payment mortgage make sense? Experts weigh in

Those who are eligible for a no-down-payment mortgage and can afford the monthly payments might benefit from not having to set aside so much money upfront.

“A no-down payment mortgage can be a great option for qualified borrowers who may not have the means to save for a down payment but have a stable income. This path could make sense when a homebuyer has limited liquidity but can comfortably afford the monthly payments and other homeownership costs, such as insurance, property taxes, and maintenance,” says Chris Birk, vice president of mortgage insight at Veterans United Home Loans. 

A no-down-payment mortgage can also make sense if you want more money to invest aside from putting money into real estate.

“Although there are a few loan programs offering zero down payment, in today’s high interest rate and elevated-price environment, it can be a challenge for buyers to get approved,” says Christiansen. 

But if you can qualify for one, Christiansen says, then you could potentially grow your net worth by investing the money that would have gone toward the down payment into stocks, bonds or other assets.

One option for a no-down-payment mortgage could be a Department of Veteran’s Affairs (VA) loan.

“For many veterans and service members, VA loans offer a secure path to homeownership with no down payment required. About three-quarters of VA buyers bought a home last year without making a down payment,” says Birk.

“Another route is the USDA loan, which is available in eligible rural and suburban areas and offers a no-down payment mortgage option,” he adds.

It’s also possible to find a private mortgage lender offering a no-down-payment mortgage, though that could involve structures like a government-backed, low-down-payment mortgage paired with another loan to cover the remaining down payment amount.

Regardless of the source, if you’re comfortable with the mortgage terms, having no down payment could help some buyers. For example, it can be a smart choice if you have a stable income, good credit and a low debt-to-income ratio, experts say. 

That’s because, in today’s tight housing market, you may not have the opportunity to save for a down payment, as buying sooner rather than later can be advantageous. However, you’ll typically need a solid borrower profile and a good credit history to obtain a no-down-payment mortgage.

Explore the top mortgage loan rates available to you here.

When does a no-down-payment mortgage not make sense?

Despite the upside of no-down-payment mortgages, there are some possible disadvantages to weigh first.

“The no-down-payment talk seems to have run rampant on the internet. This is not a new product, and it’s not widely available,” says Kevin Leibowitz, founder, mortgage broker at Grayton Mortgage, Inc. And the terms of these loans can be a bit much, he adds.

For example, you might end up with higher monthly payments compared to a regular mortgage, aside from just the difference in the loan amount. That’s because no-down-payment mortgages often come with higher interest rates and require private mortgage insurance (PMI), both of which can lead to higher monthly payments. 

And, having no equity in your home can be risky. If the property values decrease in your area, you could end up upside down on your home. Owing more than your property’s worth could cause issues like making it difficult for you to move or refinance your mortgage. So, you might not want to take on the risk.

“It may not be the best choice if the homebuyer’s financial situation is unstable, or if they are not prepared for the long-term financial commitment of owning a home. Would-be homebuyers who are struggling with high debt levels or inconsistent income may find that the added financial responsibility of a mortgage without an equity cushion is too much to handle,” says Birk.

“Additionally, in some competitive markets, sellers might prefer offers with a down payment, as they see them as more financially secure,” he adds.

Other low-down-payment mortgage options to consider

No-down-payment mortgages have their appeal, but there are other ways to buy a home without a big down payment.

“Both conventional and FHA loans offer low down payment loans, anywhere from 3% for first-time buyers with a conventional loan and 3.5% on FHA for first-time and existing buyers. To use conventional financing and be an existing buyer, a 5% down payment loan is available,” says Christiansen. 

Some of these loans still have relatively narrow eligibility requirements, but they can still be more widespread than no-down-payment options.

“Lenders may offer conventional mortgage products with 3% down payments through programs like Fannie Mae’s HomeReady and Freddie Mac’s Home Possible, which are designed to help low- to moderate-income buyers,” says Birk.

You also might qualify for programs that help you afford your down payment in the first place. For example, down payment assistance programs can provide grants for your down payment. And, that can help new or lower-income buyers get into their first homes.

The bottom line 

No-down-payment mortgages can be helpful for some buyers, such as those with plenty of income and solid credit but who lack the savings for a down payment. However, these mortgages can also increase costs and come with higher risk. As such, other options like low-down-payment mortgages or down payment assistance programs could be worth exploring.



Read the original article

Leave your vote

Continue Reading

CBS News

After Tyre Nichols’ fatal beating, Memphis officer texted photo of bloodied man to ex-girlfriend, she testifies

Avatar

Published

on


A former Memphis police officer charged in the fatal beating of Tyre Nichols sent his ex-girlfriend a photo of the badly injured man on the night he was punched, kicked and hit with a police baton following a traffic stop, according to trial testimony Wednesday.

Brittany Leake, a Memphis officer and Demetrius Haley’s former girlfriend, testified during the criminal trial that she was on the phone with Haley when officers pulled Nichols over for a traffic stop. She said she heard a “commotion,” including verbal orders for someone to give officers his hands.

The call ended, but Haley later texted the photo in a group chat comprising Haley, Leake and her godsister, she testified. Prosecutors displayed the photo for the jury. It showed Nichols with his eyes closed, on the ground with what appeared to be blood near his mouth and his hands behind his back.

Leake said that when she saw the photo, her reaction was: “Oh my God, he definitely needs to go to the Med.”

The Med is shorthand for Memphis’ trauma hospital.

The fatal beating, caught on police bodycams and street surveillance cameras, has sparked protests and calls for police reform. Officers said they pulled over Nichols for reckless driving, but Memphis’ police chief said there was no evidence to substantiate that claim.

Haley, Tadarrius Bean and Justin Smith are on trial after pleading not guilty to charges that they deprived Nichols of his civil rights through excessive force and failure to intervene, and obstructed justice through witness tampering. Their trial began Sept. 9 and is expected to run three to four weeks. 

Tyre Nichols
Former Memphis police officer Demetrius Haley arrives at the federal courthouse for the second day of jury selection for the trial in the Tyre Nichols case Tuesday, Sept. 10, 2024, in Memphis, Tenn.

George Walker IV / AP


The Memphis Police Department fired the three men, along with Emmitt Martin III and Desmond Mills Jr., after Nichols’ death. The beating was caught on police video, which was released publicly. The officers were later indicted on the federal charges. Martin and Mills have taken plea deals.

During her testimony Wednesday, Leake said she deleted the photo after she saw it and that sending such a photo is against police policy.

“I wasn’t offended, but it was difficult to look at,” she said.

Leake said Haley had sent her photos before of drugs, and of a person who had been injured in a car accident.

Earlier Wednesday, Martin was on the witness stand for a third day. Defense attorneys tried to show inconsistencies between Martin’s statements to investigators and his court testimony. Martin acknowledged lying about what happened to Memphis Police Department internal investigators, to try to cover up and “justify what I did.”

But Martin said he told the truth to FBI investigators after he pleaded guilty in August, including statements about feeling pressure on his duty belt where his gun was located during the traffic stop, but not being able to see if Nichols was trying to get his gun. Martin has testified that he said “let go of my gun” during the traffic stop.

Martin Zummach, the attorney for Justin Smith, asked Martin if he knew of any reasons why Nichols did not simply say, “I give up.”

“He’s out of it,” Martin said. “Disoriented.”

Martin testified that the situation escalated quickly when Haley pulled his gun and violently yanked Nichols from his car, using expletives and failing to tell Nichols why he had been pulled over and removed from the vehicle.

“He never got a chance to comply,” Martin said.

Nichols, who was Black, was pepper sprayed and hit with a stun gun during the traffic stop, but ran away, police video shows. The five officers, who also are Black, then beat him about a block from his home, as he called out for his mother.

Video shows the officers milling about and talking as Nichols struggled with his injuries. Nichols died Jan. 10, 2023, three days after the beating.

An autopsy report shows Nichols – the father of a boy who is now 7 – died from blows to the head. The report describes brain injuries, and cuts and bruises on his head and elsewhere on his body.

Jesse Guy testified that he was working as a paramedic for the Memphis Fire Department the night of the beating. He arrived at the location after two emergency medical technicians, Robert Long and JaMichael Sandridge.

Guy said he was not told about the medical problems Nichols had experienced before he arrived, and that Nichols was injured, seated on the ground and unresponsive.

Nichols had no pulse and was not breathing, and it “felt like he was lifeless,” Guy said.

In the ambulance, Guy performed CPR and provided mechanical ventilation, and Nichols had a pulse by the time he arrived at the hospital, the paramedic said.

Guy said Long and Sandridge did not say if they had checked Nichols’ pulse and heart rate, and they did not report if they had given him oxygen. When asked by one of Bean’s lawyers whether that information would have been helpful in treating Nichols, Guy said yes.

Long and Sandridge were fired for violating fire department policies after Nichols died. They have not been criminally charged.

The five officers also have been charged with second-degree murder in state court, where they pleaded not guilty. Mills and Martin are expected to change their pleas.

Federal prosecutors have previously recommended a 40-year sentence for Martin. A date has not been set in state court yet.

Nichols worked for FedEx, and he enjoyed skateboarding and photography. The city of Sacramento, where Nichols grew up, named a skatepark in his honor. “Tyre fell in love with skateboarding at a young age and it wasn’t long before it became a part of his lifestyle,” states the resolution approved by the city council. He had a tattoo of his mother’s name.

“Tyre Nichols’ family have been praying for justice and accountability from the very beginning of this tragedy,” Ben Crump and Antonio Romanucci, the civil rights attorneys representing Nichols’ family, said in a statement when the trial began. 



Read the original article

Leave your vote

Continue Reading

CBS News

Boeing set to start large-scale furloughs due to machinists strike

Avatar

Published

on


Boeing’s CEO said Wednesday that the company will begin furloughing “a large number” of employees to conserve cash during the strike by union machinists that began last week.

Chief Executive Kelly Ortberg said the people who would be required to take time off without pay starting in coming days include executives, managers and other employees based in the U.S.

“While this is a tough decision that impacts everybody, it is in an effort to preserve our long-term future and help us navigate through this very difficult time,” Ortberg said in a company-wide message to staff.

Boeing didn’t say how many people will face rolling furloughs, but the number is expected to run into the tens of thousands. The aerospace giant had 171,000 employees at the start of the year.

About 33,000 Boeing factory workers in the Pacific Northwest began a strike Friday after rejecting a proposal to raise pay by 25% over four years. They want raises of at least 40%, the return of a traditional pension plan and other improvements in the contract offer they voted down.

Boeing's Seattle Workers Walk Out In First Strike Since 2008
Workers picket outside a Boeing in Everett, Washington, on  Sept. 16, 2024. 

Scott Brauer / Bloomberg via Getty Images


The strike is halting production of several airplane models including Boeing’s best-selling plane, the 737 Max. The company gets more than half of the purchase price when new planes are delivered to buyers, so the strike will quickly hurt Boeing’s cash flow.

Ortberg said selected employees will be furloughed for one week every four weeks while retaining their benefits. The CEO and other senior executives will take pay cuts during the duration of the strike, he said, without stating how deep the cuts will be.

All work related to safety, quality, customer support and certification of new planes will continue during the furloughs, he said, including production of 787 Dreamliner jets, which are built by nonunion workers in South Carolina.

Ortberg said in a memo to employees that the company is talking to the International Association of Machinists and Aerospace Workers about a new contract agreement that could be ratified.

“However, with production paused across many key programs in the Pacific Northwest, our business faces substantial challenges and it is important that we take difficult steps to preserve cash and ensure that Boeing is able to successfully recover,” he said.

Boeing’s chief financial officer warned employees earlier this week that temporary layoffs were possible.

The company, which is based in Arlington, Virginia, but has most of its commercial-airplanes business located in the Pacific Northwest, is also cutting spending on suppliers, freezing hiring and eliminating most travel.

Despite two full days of talks assisted by the Federal Mediation and Conciliation Service, the union said Wednesday that no resolution had been reached and no additional negotiations were scheduled, according to CBS Seattle affiliate KIRO-TV.

Striking workers are picketing at several locations in the Seattle area, Oregon and California. The union, which recommended the offer that members later rejected by a 96% vote, is surveying the workers to learn what they want in a new contract. The union’s last strike at Boeing, in 2008, lasted about two months.

If the walkout doesn’t end soon, Boeing’s credit rating could be downgraded to non-investment or junk status, which would make borrowing more expensive. Shortly after the walkout began Friday, Moody’s put Boeing on review for a possible downgrade, and Fitch said a strike longer than two weeks would make a downgrade more likely.



Read the original article

Leave your vote

Continue Reading

CBS News

A Moment With: Viswa Colluru

Avatar

Published

on


A Moment With: Viswa Colluru – CBS News


Watch CBS News



Enveda Biosciences CEO and Founder Viswa Colluru shares his journey to delivering hope through new medicines

Be the first to know

Get browser notifications for breaking news, live events, and exclusive reporting.




Read the original article

Leave your vote

Continue Reading

Copyright © 2024 Breaking MN

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.