The 100% equity mortgage loans present a new strategy to home-owners by helping them to
borrow cash “against the full value of the property.” The homeowner may find it easy to take out
the 100% equity loan, since he may feel he is getting the best deal. The 100% Equity Mortgage
loans integrate the upfront fees, including closing costs into the mortgage plan, thus the borrower
pays nothing upfront. Borrowers often choose this loan when they do not have available funds to
cover the upfront costs on mortgage loans.
The downside is the 100% equity mortgage loans are similar to standard loans, since the buyer is
placing his home up for collateral. First time buyers may want to consider the 100% mortgage
loans, since no upfront costs are needed; however, be aware that risks out of the ordinary are
involved. The 100% Mortgage loans whether equity is involved or not looks at “negative
equity.” If you take out the loan, and the value of the property falls below the amount of money
borrowed, then you may face additional charges.
Many of these loans come with high interest rates and at times a lender may require that the
borrower agree to additional stipulations, such as the “Mortgage Indemnity Guarantee.” This
policy ensures that–one way or another–the lender will get his money. If you fail to agree to the
policy, the lender most likely will deny your loan.
Finally, when consider loans, make sure you know what you are getting into by reading all
available information pertaining to the loan. You will want to understand what all of the
different rates and fees will be–and how this will ultimately affect how much you pay monthly
and for the long term–by weighing out the pros and cons before signing any permanent