When you decide to make the big leap to homeownership, there seems to be a long road ahead before securing ownership of your new home. There is the loan application, the paperwork, insurance concerns, and most importantly the costs associated with buying a home for the first time. It can be incredible confusing and lead to a lot of impatience.

The costs associated with buying a home may be more than many people actually anticipate. There are closing costs, inspection costs, insurance payments, and of course, moving costs. When it comes to having enough cash to cover all of that up front, it seems near impossible to fork over 10-20% of the home price as a down payment in addition to everything else. But most lenders will want to see that down payment money before even approving a loan application. Since there has been such crisis in the mortgage industry involving foreclosures, lenders are much stricter than ever. They want to see good credit scores and money up front.

The Exception in Lending
Of course, there are exceptions to every rule. There are some lenders who promote 0% financing for first time homeowners. They will not only finance the entire loan, they will also offer to roll in the closing costs, generating a 105% loan on a home. The additional costs then become part of the monthly mortgage payments. Home buyers will not have to save for a down payment and can move in much faster. They can use their cash to front moving costs.

Say No to Zero
While it may seem incredibly tempting to want a fully financed loan, it can also be detrimental to your financial future. The additional amount financed raises monthly payments to a level that may be unmanageable down the road. Since lenders look for good credit and upfront money, they may be less likely to give you a break on the interest rate for your 0% down loan, adding additional money to your monthly payments.

Saving for Down Payment is Key
Before you rush in to purchase your first home, take the necessary steps to ensure a sound investment. Start a savings plan toward your down payment and contribute funds regularly. Be sure your credit is excellent and understand how much house you can afford before even shopping for a new home. While it may seem easier to take a 0% down loan and move right in, it is best to not rush into what is probably the biggest purchase you’ll ever make.