Beware advertisements for 1% downpayment mortgages

CHARLOTTE — When it comes to buying a new home, there will always be some uncertainty.

Consumer expert Clark Howard explains why you should avoid shortcuts that may seem easy.

According to Howard, there are advertisements all over the internet referencing a 1% downpayment mortgage.

The motive of the ad is to appeal to potential home buyers who are feeling like they are strapped for cash, so the 1% down payment seems appealing.

Howard said this is a bad idea because you are upside down in that home the second you buy it.

However, if you later want to sell that home in the next several years, you will probably have to go to the closing with money to pay off a balance on the mortgage.

In addition, your monthly payments are going to be so much higher because you’re financing 99% of the loan.

Howard said it may seem like a shortcut to you being able to buy that home, but in reality, it’s just a dangerous shortcut.

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