BuyIncomeProperties.com
Your #1 Income Property Resource.

 No Money Down Real Estate Investing Course
Learn How To Buy Income Properties Without Risk, Good
Credit, Money Or Tenants!

Click here for more information

 Welcome to BuyIncomeProperties.com! Visit the Real Estate Investing Forums.


Real Estate Articles 
 
 Real Estate 
 Homeowners
 Second Home
 Success Stories
 Rentals
 Real Estate Q & A
 Real Estate News
 Real Estate Law & Policy
 Money Making Ideas
 Home Improvements
 Tax and Insurance
 Appraisal and Inspection
 Log Homes
 Mobile Homes
 Home Buyers
 Constructions and Home Buildings
 
 Real Estate Investing 
 Foreclosure
 Vacation Home
 Rental Property
 Preconstruction Investment
 Marketing Secret
 Joint Venture
 Land Investment
 Lease Purchase
 Probate Real Estate
 Real Estate Clubs
 Short Sales
 No Money Down Investing
 Flipping
 Fixer Uppers
 Resort Home
 Loft Apartment
 Property Development
 Tax Incentives
 Investing Strategy & Tips
 Real Estate Wholesale Property
 How To Articles
 Subject To
 Real Estate Books
 Apartment Investing
 Commercial Real Estate
 Residential Property
 Hotels and REITs
 1031 Tax Deferred Exchange
 Investment Property
 Real Estate Advanced Techniques
 Trust Deed Investments
 Creative Home Buying
 Wholesale Real Estate
 Real Estate Auctions
 Tax Lien Certificate
 HUD Homes
 Real Estate Regional USA
 Austin, Texas
 Houston
 Colorado Springs
 Florida
 Boise
 Reno, NV
 Landlord
 Rehab
 Market Analysis
 Property Management
 Condo Conversion
 real estate guru
 Bank Foreclosure
 VA Homes
 Buy To Let
 Rent to Own
 Tax Deed
 Stop Foreclosure
 Retirement Planning
 Real Estate Investors
 International Real Estate
 Canada
 india
 United Kingdom
 Real Estate Seminars
 Negotiating
 Condo Hotel Investments
 Partnerships
 NNN Properties
 real estate notes
 Real Estate Education
 REO Properties
 Life Estate
 REIT
 Income Properties
 
 Mortgage and Finance 
 Mortgages
 Mortgage Leads Generation
 Mortgage Leads - Leads Mortgage
 Mortgage Marketing
 Creative RE Financing
 Hard Money Lender
 Debt Consolidation
 Income Property Financing
 Home Equity
 Credit Repair
 Mortgage Tools
 Home Construction Loan
 Commercial Loans
 Owner Finance
 Private Lenders
 Discounted Notes
 Assumable Mortgages
 Seller Financing
 Equity Lines of Credit
 
 Real Estate Pros 
 Real Estate Agent and Broker
 Mortgage Agent and Broker
 Real Estate Marketing
 Real Estate Consultant
 
 Real Estate Resources 
 Mortgage Foreclosure Example
 Mortgage Origination forms
 Property Transfers
 Tenancy Agreement and Form
 Internet and Online
Search


Real Estate Investing : No Money Down Investing Last Updated: May 14th, 2012 - 22:24:01


No Down Payment

 
Email this article
 Printer friendly page

No Down Payment

My husband and I are in the same situation as many. We can afford the house payments but not the down payment. I don't know too much about the rent-to-own option so any information about it would be appreciated. Would this be the best route or should we just wait until we save the down payment? I want our son to grow up in a house not an apartment. And some apartments cost the same as house payments. Why pay $800 in rent that could be going towards a house?
Bobbi


Thoroughly Read the Contract

Renting with the option to purchase is a great way to obtain your first home and affords you the opportunity to get into a home without closing costs. It is also known as buying on contract if you know you are purchasing, but you just don't need any money up front other than perhaps realtor fees.

But be sure you have a contract and be sure you read it over completely at your leisure. Do not sign it until you have had your own attorney look the contract over.

We bought our first home on contract with nothing down. But we also started looking for our own mortgage as soon as we felt that we stood a good chance of being able to get it, and we had it within a year. We felt much more secure with a bank as our lender.
Bonnie

Have Seller Pay the Down Payment

I'm a Realtor who works exclusively as a buyer's agent, and I run into people in Bobbi's situation frequently. There are many programs available now that will help you buy a home with no down payment.

Programs like Amerdream and Neighborhood Gold allow the seller to pay the down payment for the buyer. Under those programs, you ask the seller to absorb a 3% down payment. As a result, you'll probably need to offer 3% more than you would normally, just to be competitive with other offers. You might even be able to get the seller to pay your closing costs, if you are able to offer them a high enough purchase price.

Here are two things to consider when you go this route:

First, your Realtor should help you make sure your offer is within the market value for the area, considering the age, size and condition of the home. If the appraised value is less than the contract price, your loan will not be approved.

And, secondly, think about resale of that home in the future. If the price you pay for the house is at the high end of the market, it may take longer than normal for the value of your home to increase enough to cover your purchase price plus normal closing costs and commissions paid by a seller. This isn't normally a problem if you buy in an area with rising home values, and you are willing and able to remain in the house and take care of it while you're there. But, if you may need to sell in the next few years, you could find yourself having to pay extra money to sell your home, instead of making a profit.

All that said, many people are finding these programs a real bargain because they've been able to move into their own home while interest rates are at historical lows, and they haven't had to wait until they could save up for a down payment. Call some Realtors in your area. Interview them to see if they are knowledgeable about these types of programs, and whether they are willing and able to help you. Choose one to represent you. Then, have fun shopping and planning to move into your new home!
Marilyn H. from Mississippi

Move Out of the City

If one is willing to check into it, a home can be purchased through the USDA Home Program with no down payment. There are certain requirements that go along with the loan, such as living in a rural area, but this can be just outside of large metropolitan areas. This program was designed to get people to move out the city in order to populate the rural areas. There is no down payment, lowest interest rates to be had, and in certain situations, your house payment can be subsidized. Had I not found this type of loan 15 years ago, I too would still be living in an apartment.

There are offices throughout the United States. These can be found along with information concerning the loan at the USDA Rural Homes website at www.rurdev.usda.gov/rhs/. All one has to do is navigate the website. You can look at income levels that will help to determine if you qualify for this loan. I took a loan out on a house that had been repossessed by them and needed repairs. Because of this, they gave me two loans (one for repairs and one on the house itself) that were then combined into one payment. I have a three bedroom, one bath home with detached garage.

This loan also has many clauses in it that helped me out when I got into financial problems. When I became sick in 1996, they lowered my payment. Payments are based on income, with certain deductions allowed. My payment became $96 per month. At present, my payment stands at $205 monthly as I am now on disability. Had it not been for this clause, I would have lost my home. Plus one can borrow money from them once established for using in renovations or repairs of the home with interest rates and terms that no bank or financial institution could even begin to match.
Iris

Non-Profit Assistance

Many cities and towns have non-profit organizations that assist first time homebuyers with down payment and closing costs. To find one in your area, look on the Internet for Home Ownership Counseling Centers or Neighborhood Housing Services. Many banks can also refer you to programs that offer down payment assistance.
Angie

No-Down-Payment Options

In our area and many other areas, both the city and the county have Homebuyer Assistance Programs. They give you a grant of $5000 to $7500 toward the down payment on a home. The only catch is they require you to live in the home for either 5 or 10 years. If you move out prior to that time, then you have to pay it back as an interest free loan. But since the house will go up in value, if you move out early, you can pay it off with the equity in the home.

HUD sponsors the program and the purpose of the program is to allow renters to buy a home. Call your local city's community development office and see if they have a program like this in your area.

Also do a search on the Internet for Homebuyer Assistance Programs or Down Payment Assistance Program. This program made the difference of us being able to afford to buy a house in a really good neighborhood or a not so good neighborhood.

And once you buy the home, always make extra principle payments, even an extra payment of $20 to $50 per month will cut many years and thousands of dollars in interest off your loan
Mike

The Closing Table

There are so many options and programs available that having no money for a down payment should not create problems for you. Even borrowers with troubled credit history can find 100% financing. If your rate seems a little high, ask your loan officer about doing a pre-payment penalty or an adjustable rate mortgage (aka ARM). I do a lot of 100% financing and have found that most first time homebuyers are payment sensitive. By doing a pre-payment penalty and/or an ARM, your payment is much lower. Please make sure you ask the details of the prepayment penalty. For example, some pre-payment penalties will allow you to sell your house to someone other than a close family member and the penalty is waived. However, if you win the lottery or refinance and pay the loan off before the prepayment term is expired, you may have to pay a hefty penalty. Also, ask your loan officer and realtor about doing a FHA loan, "rolling in" 3% of your closing costs and using down payment assistance, if necessary. All of these things should keep you from taking much, if anything, to the closing table.
Billie
Sr. Loan Officer

Find a Good Realtor

I'm a Realtor in Baytown, TX and I frequently work with first-time homebuyers who are in the same situation. A good Realtor can be your best tool if you are ready to own a home, but need some help.

If a buyer has reasonably good credit and can get a loan, but doesn't have the down payment and closing costs saved up, it may be possible for the down payment and at least some of the closing costs to be rolled into the purchase price of the house. The only caveat is that the seller must agree to this type of transaction, and the house to be purchased must appraise for the total amount.

There are also a number of homebuyer assistance programs that can provide down payment and closing cost assistance for qualified buyers. Interested but don't know where to start? Contact an experienced local Realtor, preferably someone who has lots of experience working with first-time homebuyers. And don't be worried about the real estate agent's fee. Most of the time in my market, the seller pays the real estate agent, even if the agent is working for the Buyer.
A

Check Local Non-Profits

Check your local non-profits. I qualified for the local Mennonite Housing program for no down payment. The program is income based. I do not have to repay the loan if I live in the home for 5 years and perform 100 hours of community service work or work on my own home within the first year. This program also has many other programs available to persons of any religious denomination. I live in KS.
C

Use Caution with Land Contracts

We bought our home on a land contract, which is very common in this region. I was familiar with the technical definition but not the practical realities, which we learned the hard way.

First, consider why the owner is selling it that way instead of through a regular mortgage. Some folks are being kind to buyers without a large down payment and others are using it because they can't sell through a regular mortgage, which was what we eventually found out about our house. There was a boundary discrepancy, which could have caused us to lose an entire room of our house some day if the neighbor or her beneficiaries ever wished to push the issue, which kept any honest real estate agent from being able to list the house. Once the owner found out that we were aware of the problem, she took the proper steps to rectify it, which is what she should have done to begin with.

Also, the owner retained the right to inspect the house at any time, which we didn't mind, but she also felt that she had the right to approve any cosmetic changes we'd made! She then attempted to "foreclose" on us on the basis of violating the contract by putting up wallpaper, etc. The contract actually stated that she had to be notified of any major renovations or changes to the property. Ultimately, she did not succeed, of course, but it was a lot of headaches and a bit of money wasted in defending ourselves against this.

The bottom line is make sure that you have your own lawyer who reviews any contracts before you enter the agreement to be sure that all parties are clear on all conditions. I certainly understand our seller wanting to protect her property from casual buyers who might damage the property and then default, leaving her holding the bag, but that was not how she attempted to use those clauses of the contract. We were serious buyers, not renters, and all changes we'd made were improvements that increased the value of the property. Plus, we'd actually been defrauded as far as the boundary discrepancy was concerned, which is why she attempted to get rid of us.
Kay

Secure a Down Payment

I'm a mortgage loan officer and there are ways to secure a down payment:

  1. Ask the seller for a concession. This is usually around 6% and it can be placed at the "front" or "back" of the loan

  2. Perhaps a relative can "gift" the down payment. It doesn't matter to the lender who gives it to you.

  3. Check the face value on your whole life insurance policy and borrow against it.

  4. If you or your husband is a veteran, go through VA. There will be no down payment, although it takes a little longer to process than conventional lending.

  5. Be sure to select a home that is not too expensive. Go to a lender for a free consult to see how much "house" you qualify for before you select.

  6. Check the point spread that the broker is charging to make sure it is equitable and you save money. Be on guard for "predatory lenders."

  7. It also helps to have two months "cash reserves." Be sure to find out if the lender wants "seasoned" money. Has it been in the account for awhile?

  8. Buy a "fixer-upper." Sometimes the seller will waive the down payment in place of "sweat equity."


J.M.

Gary Foreman is a former financial planner who currently edits The Dollar Stretcher www.stretcher.com You'll find hundreds of free articles to help you "live better...for less".

His email: gary@stretcher.com

 

Do you own real estate articles or stories and want to share with other investors? 
You have chance to win
$100 Amazon Gift Certificates. We will give away 3 prizes for top authors each month!

Email your articles or stories to:  articles@buyincomeproperties.com

 

© Copyright 2001 - 2010 by BuyIncomeProperties.com            Page copy protected against web site content infringement by Copyscape   

 


 

Visit Real Estate Forums for every real estate investing topics!  Enter Here

    

Top of Page



Home Courses Real Estate Forms Income Properties For Sale Forums CalculatorReal Estate Education    


Copyright © 2001 - 2010, BuyIncomeProperties.com. All Rights Reserved. Privacy Policy in Observance.