Answer: You'll love the feeling of having something that's all yours - a home where your own personal style will tell the world who you are. A thriving vegetable garden in the backyard, a tiled entryway, a yellow kitchen...when you own, you can do it all your way! But there's more to owning a home than personal satisfaction. You can deduct the cost of your mortgage loan interest from your federal income taxes, and usually from your state taxes, too. And interest will compose nearly all of your monthly payment, for over half the number of years you'll be paying your mortgage. This adds up to hefty savings at the end of each year. And you're also allowed to deduct the property taxes you pay as a homeowner. If you rent, you write your monthly check and it's gone forever. Another financial plus in owning a home is its value will go up through the years.

Examples of Renting vs. Buying:

*This is just an example based on an average client situation, please see your tax advisor for correct information that relates to you.

Current Rent: $1,600/month
Current Yearly Combined Income before taxes: $60,000
Current Tax Bracket: 35%
Annual Taxes: $21,000

Let’s say you have purchased a home and took out a 100% loan from 0FeeMortgages.com:
Purchase Price: $385,000
100% No Fees Loan Values:
80% Loan: $308,000
20% Loan: $77,000

These are the Interest Rates (based on 5/25/04, please see current rates on our website):
80% Interest Rate: 6.25%
20% Interest Rate: 8.5%

Your Payments for new home will include Principle, Interest and Real Estate Tax and Insurance. However, Real Estate Taxes and Insurance is tax deductible and is not included in this payment to make things simpler.

Principle and Interest payment: $2,461.90/month


Your new Tax Calculations:

In the first year you will pay interest rate and principle while paying your loan off. Combined tax deductible interest paid in the first year will be: 6.25% x $308,000 + 8.5% x $77,000 = $25,795
Also, most likely you will be moved to a new Tax Bracket: 30%
Taxes after deduction: ($60,000 - $25,795) x 30% = $10,261.50

Yearly Tax savings: $21,000 - $10,261.50 = $10,738.50
Per month savings: $10,738.50 / 12 = $894.88 + (you can benefit from other possible itemized deductions)

The payment of $2,461.90 is really:
$2,461.90 - $894.88 = $1,566.12/month
Do you think you can afford to pay a little extra and own your own home for 0% down?

100% Financing is a way to get into a home without having 20% or even 5% to put down for your future home. Thousands of people are taking advantage of this program, and are moving into their new homes. Everyone knows that renting wastes your money by transferring money from your account to your apartment owner without any benefits to you. Buying a home will generate you tax cuts and at the same time give you a home that is appreciating over time.

For example please view "How does 80-20 loan work and why split?"

Answer: To avoid Mortgage Insurance the loan value must be less than or equal to 80% of the total purchase price. So the 80-20 split doesn’t require mortgage insurance. Also lender is able to price the loan rates lower, because they can sell the 20% to different investors. Combination of the two loans is actually lower then most of our clients think. As you can see in this example.

Example:

You are applying for a 100% purchase loan on a home that costs $200,000.
Interest rate for the %80 Loan is %7.5.
Interest rate for the %20 Loan is %9.5.
Blended Rate = (.8 x 7.5 ) + ( .2 x 9.5) = 7.9%

First 80% Loan = $160,000
Second 20% Loan = $40,000

Using a Real Estate Calculator, Principle and Interest Payments are:

First 80% Loan = $1118.74 / month
Second 20% Loan = $336.34 / month
Total Principle and Interest: $1,455.08 / month

Using our rate table requires understanding of three basic ideas in the mortgage/loan business:
FICO scores
Loan to Value Ratios
Loan Programs

You have to select appropriate FICO score, then select desired loan program, and view the 80% rate and 20% rate.

FICO score ranges:

FICO is your credit score that is determined by three different credit bureaus - Experian, Trans Union and Equifax. 0 Fee Mortgages will not charge you for your credit report, if you qualify and apply for our 0 Fee Program. Scores range from lowest of 300 to the best of 900, but it is more common to see people in the ranges of 550-720. A score above 700 is considered a good score and lenders will offer the best rates, while scores below 700 are adjusted according to lender’s rules, the lower the score the higher the rate.

If you don’t know your scores, you can either approximate them or apply through us and we will determine them for you through ordering your free credit report. Checking your credit score from different sources (i.e. online) is a bad idea, because it will actually lower it in the short run. Credit bureaus can’t differentiate between applications for credit lines and applications for checking your credit scores, all they see is a request for a credit check and they assume it is an application for a loan or credit card and they drop the score by 10-20 points automatically to limit your ability to borrow. It takes anywhere between 1 to 6 month to restore the credit to the same level.

If you were never late with a payment, and you have some credit established, such as auto loans, educational loans or credit cards, you will most likely receive a high score.
If you have too many or too little credit lines, or they are maxed out to the limit, or if you are not paying on time your score will be lower. It is hard to approximate correctly, but you can take several steps to make it better in the long run:
· Pay your bills on time. Late payments and collections can have a serious impact on your score.
· Do not apply for credit frequently. Having a large number of inquiries on your credit report can worsen your score.
· Reduce your credit-card balances. If you are "maxed" out on your credit cards, this will affect your credit score negatively.
· If you have limited credit, obtain additional credit. Not having sufficient credit can negatively impact your score.


80% + 20% = 100%:

LTV - Loan-to-value ratio is the proportion of the loan as to compared to the value of the home being purchased. You are applying for 100% LTV loan that is split into two loans: 20% LTV and 80% LTV, combined they equal 100%.

To avoid Mortgage Insurance the loan value must be less than or equal to 80% of the total purchase price. So the 80-20 split doesn’t require mortgage insurance. Also lenders are able to price the loan rates lower, because they can sell the 20% to different investors. Combination of the two loans is actually lower than most of our clients think. As you can see in this example.


Loan Programs:

2/28 – 2 Year Fixed Rate, 28 Years Adjustable
3/27 – 3 Year Fixed Rate, 27 Years Adjustable
5/25 – 5 Year Fixed Rate, 25 Years Adjustable
30yr Fixed – 30 Years of fixed rate.

30/20 - 30 Year Fixed Rate, due in 20 Years
HELOC - home equity line of credit, or simply "home equity line"

There is no wrong loan program. Each one is used for a different purpose.

2/28 as you noticed has the lowest interest rates, it could be a benefit to you, or it could be a disadvantage to you. We recommend this great program for people who either need to qualify for a higher loan amount (as lower rates produce higher purchase price), or for people who are planning to move in the next 2 to 3 years. In the first 2 years this program saves over 1% in interest rate, which might seem like a small difference, but if you compare 6% vs. 7% difference on 200,000-loan amount in 2 years you get savings of $3,158.52.

3/27 and 5/25 – for people who want a stable interest rate for longer than just 2 years, and also want to take advantage over lower interest rates. Chances that you will move in the next 5 years are incredible. Over the past 25 years we have seen about 80% of buyers buy another property within 7.5 years of buying the first one. Things change rapidly, and your family income and job location are just few of the reasons you might decide to move.

30 Year Fixed – The very basic traditional loan that has been around for ages. People desire it for the very same reason they wanted it when it came out – stability. For the next 30 years you will have the same monthly payments that you paid the first month.

30/20 - sometimes used as a second loan of 20% of the purchase price. A baloon payment is due in 20 years, but the amortization schedule is based on 30 year mortgage. So the monthly payments are low.

HELOC - used for second loans of 20% of the purchase price if it has lower rate than 30/20 Program, we will select the lowest rate for your second loan. If you desire 30/20 for some reason, please tell us and we will gladly do it.


We give you the option to choose any program, and we can also professionally advise you which one to choose based on you personal case. If you still desire more information, please contact and we will help you with any questions about these programs.