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By
PRWEB
NetVantage a benefit to consumers seeking a lower cost home loan
(PRWEB) December 16, 2004 -- Network Mortgage has announced the rollout of its
newest conventional loan program, which allows for financing with as little
as 5% down without the need for secondary financing or borrower paid mortgage
insurance. The program, which the company has dubbed the NetVantage, is
available to borrowers that may be short on a large down payment, but do not
want to pay mortgage insurance or be subject to rising payments that are
often associated with Home Equity Lines of Credit (HELOC).
In the past, many buyers have sought to avoid paying mortgage insurance (MI)
premiums by piggybacking second mortgages or equity lines of credit on behind
conventional first mortgages. The combination of first and second liens
allows down payments anywhere from zero to 15 percent, without mortgage
insurance. Typically, lenders require mortgage insurance whenever borrowers
buy houses with less than 20 percent down.
While that type of financing has been popular, many consumers are now finding
themselves with increasing monthly payments, making it a more expensive
financing option. Home Equity Lines of Credit are typically tied to the prime
lending rate, which has increased five times this year. Further, most HELOC
loans do not require any principal payments, which means the consumer has to
rely on appreciation alone in order to build equity.
The Network Mortgage program offers what a company representative states is
simply a better way to finance a home: One low fixed rate mortgage loan, one
set of closing costs, and one lower monthly payment. Equally important is the
feature it doesn’t have: a HELOC payment that is all but guaranteed to rise
yet again in early 2005.
This type of program isn’t new. In fact, lender paid mortgage insurance has
been around for years in one form or another. What makes the NetVantage
program shine is the cost structure for the consumer. “We’ve been able to
negotiate a better deal for the consumer than what is typically available
from the larger lenders,” states Network Mortgage Executive Vice President
Kevin Lane, “Typically, a borrower will see an increase of at least a half a
point (.500%) or more in the interest rate offered (versus the going rate
with mortgage insurance or secondary financing). With our program, it’s less
than half of that, which translates into thousands of dollars in savings over
the life of the loan. Further, the borrower won’t have the hassle of having
to incur the costs of refinancing simply to get rid of their ever-increasing
home equity loan payment.”
Lane states that the program is not for everyone, but simply provides an
alternative to what many consumers say are the negative attributes of
piggyback financing—extra closing costs, rising variable rates, balloon
payments and early payoff penalties. “Many loan programs are designed to help
a buyer get into a home,” he continues, “but what we’ve essentially done is
replaced a home equity loan with a home equity builder. What it does is
provide the customer with an option that places more of an emphasis
strengthening their long term financial health.”
Currently the company is offering the program only through its retail lending
channel, and gives consumers two down payment options: the NetVantage 90,
with 10% down, or the NetVantage 95, with 5% down. The company plans to roll
out the NetVantage 100, a zero down program, sometime in early 2005.
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