Missouri Home Loan Tips: Financing Home Mortgage with No Money Down
Saint Louis (St. Louis), Missouri, is of the most affordable cities to make a home purchase, reported the National Association of Home Builders. According to the group's Housing Opportunity Index, 81.7% of St. Louis homes are affordable to homebuyers with a median income. St. Louis was the second most affordable city on the index, second only to Detroit, Michigan (MI). There is also very little chance that housing prices in St. Louis will drop, according to an index compiled by PMI Mortgage Insurance Company. The San Francisco Bay Area firm's PMI Risk Index, released in April 2005, indicated that St. Louis only has a 9% chance of substantial price declines over the course of the next two years.
Home prices in St. Louis and other parts of Missouri are likely to continue to grow, although at a slower pace than some parts of the country, which make Missouri home buying and financing a second home in Missouri attractive options. "The price appreciation in the Midwest has been well below the U.S. average, which has been 51% in some parts of the West (over a five-year period)," William Wheaton, director of the Massachusetts Institute of Technology Center for Real Estate, was quoted as saying in the St. Louis Post-Dispatch. Springfield is Missouri's third-largest city, and Kansas City enjoys similar housing affordability as St. Louis.
With Missouri's home prices being so affordable, you probably won't have to worry about needing a jumbo home loan. Even in though you could potentially buy a house as low as $123,000, coming up with a 20% down payment of nearly $25,000 can be rather difficult. So, if you lack the cash reserves for a 20% down payment, you may want to consider a 100% 1st mortgage, also known as a no money down home loan or 80-20 home mortgage due to the typical first mortgage that covers 80% of the purchase price and piggyback second mortgage that covers the remaining 20% down payment.
If you don't have the 20% down payment, you will need a second mortgage with your purchase or you will have to pay mortgage insurance, also known as private mortgage insurance (PMI). PMI is expensive and only benefits the lender, but an 80-20 loan offers the benefit of up to a 100% tax deduction on the interest you pay on your mortgages. Also, with rates being low, especially if you have sufficient funds for the down payment, it's best to get a fixed interest rate loan to avoid the risks associated with interest only loans and the interest rate hikes you can experience with adjustable rate mortgages (ARMs).
Nationwide Mortgages offers consumers living in the "Show Me" state, home loan financing tips for refinance, home equity, second mortgages, home purchase and debt consolidation loans.
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