Major banks now offering no down payments on home loans

One major bank is offering no money down on mortgages for some homebuyers.
3:21 | 09/22/22

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Transcript for Major banks now offering no down payments on home loans
>>> WE'RE BACK WITH WHAT COULD BE A MORTGAGE GAME CHANGER. ONE MAJOR BANK IS NOW OFFERING NO MONEY DOWN MORTGAGES TO SOME BUYERS DESIGNED TO CLOSE THE HOME OWNERSHIP GAP FOR MINORITIES. BUT THERE ARE SOME IMPORTANT THINGS TO CONSIDER BEFORE YOU BORROW. REBECCA JARVIS IS BACK WITH MORE ON THAT. REBECCA, GOOD MORNING. >> Reporter: HI, WHIT. ONE OF THE BIGGEST OBSTACLES TO HOME OWNERSHIP IS SAVING UP FOR THE DOWN PAYMENT, TYPICALLY 20% OF THE HOME'S PRICE. NOW BANK OF AMERICA IS LAUNCHING A NEW PROGRAM THAT WILL HELP BUYERS IN PREDOMINANTLY BLACK AND HISPANIC NEIGHBORHOODS INCLUDING CHARLOTTE, DALLAS, LOS ANGELES AND MIAMI. IT WILL MAKE THE DREAM OF BUYING A HOME POSSIBLE AND HERE'S WHAT YOU NEED TO KNOW. THIS MORNING, THE COST OF BORROWING UP AGAIN WITH THE FED HIKING INTEREST RATES FOR THE THIRD TIME SINCE JUNE TO COMBAT HISTORIC INFLATION. >> WE HAVE GOT TO GET INFLATION BEHIND US. I WISH THERE WERE A PAINLESS WAY TO DO THAT. THERE ISN'T. >> Reporter: THE RESULT, NEW HOME LOANS ARE MORE EXPENSIVE. THE AVERAGE 30-YEAR FIXED RATE MORTGAGE NEARLY DOUBLING SINCE JANUARY, NOW ABOVE 6%. >> THE HOUSING MARKET DOESN'T DO WELL IN A RISING INTEREST RATE ENVIRONMENT. AND THAT'S BECAUSE CONSUMERS ARE RELYING ON MORTGAGES IN ORDER TO BECOME A HOME OWNER AND WHAT WE'VE SEEN SINCE THE START OF THIS YEAR IS THAT MILLIONS OF AMERICANS HAVE NOW BEEN PRICED OUT OF HOME OWNERSHIP. >> Reporter: AS A RESULT, MORE AMERICANS ARE NOW TURNING TO ADJUSTABLE RATE MORTGAGES, LIKE THE 5/1 A.R.M. OFFERING MORE THAN A PERCENTAGE POINT LOWER THAN THE 30-YEAR FIXED. THIS LETS YOU BUY WITH LOWER PAYMENTS FOR THE FIRST FIVE YEARS. THE RISK, THE LOANS ARE SUBJECT TO A VARIABLE RATE. MEANING IF RATES GO MUCH HIGHER, YOU'LL EVENTUALLY HAVE TO MAKE MUCH HIGHER PAYMENTS. SOMETHING THAT HURT A LOT OF HOMEOWNERS IN THE GREAT RECESSION. THE POPULARITY OF THESE LOANS IS NOW AT A 15-YEAR HIGH. SOME BANKS ARE ALSO OFFERING NEW PROGRAMS FOR THOSE WHO FALL WITHIN INCOME REQUIREMENTS LIKE CHASE'S DREAMMAKER MORTGAGE WHICH LETS QUALIFIED BUYERS MAKE DOWN PAYMENTS AS LITTLE AS 3% AND BANK OF AMERICA'S COMMUNITY AFFORDABLE LOAN SOLUTION WHICH OFFERS ZERO DOWN PAYMENTS AND ZERO CLOSING COSTS IN SPECIFIC MARKETS FOR QUALIFIED FIRST-TIME HOME BUYERS. AND THE BIG DISADVANTAGE AND RISK TO ADJUSTABLE RATE MORTGAGES IS WHAT HAPPENS AFTER THE FIXED PERIOD IS UP. THIS HAPPENED TO A LOT OF PEOPLE IN THE FINANCIAL CRISIS WHEN RATES WENT UP AND THEY ACTUALLY OWED EVEN MORE THAN THEY WOULD HAVE WITH A FIXED RATE MORTGAGE. SO YOU HAVE TO DO THE MATH HERE. NOW, WITH THOSE ZERO DOWN PAYMENT AND LOWER DOWN PAYMENT PROGRAM, YOU ALSO HAVE TO REMEMBER THAT YOUR MONTHLY BILLS WILL LIKELY BE HIGHER AND IN A HOUSING MARKET AND AN ECONOMY LIKE THIS WHICH IS SHOWING SOME SIGNS OF POTENTIAL RECESSION AHEAD YOU WANT TO BE REALLY CLEAR ABOUT THE RISKS THAT YOU ARE TAKING ON, GUYS. THIS IS A VERY GIGANTIC FINANCIAL DECISION BUYING A HOME PROBABLY THE BIGGEST FINANCIAL DECISION OF YOUR LIFE AND YOU WANT TO GO INTO IT WITH THE RIGHT INFORMATION, DO ALL THE MATH, YOU CAN ASK BUT THERE'S ALSO A TON OF CALCULATORS ONLINE THAT WILL HELP YOU DO THIS MATH, AND THEY'RE VERY USER FRIENDLY THESE DAYS SO DO IT SO YOU DON'T REGRET IT DOWN THE LINE. GUYS. >> YEP, IT

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