Sunday, November 3, 2013
5 Ways To Buy Real Estate with No Money Down - 100% Home Financing
1. Lease-OptionRent a property from the seller with the option to buy. This buying technique is ideal for home buyers with bad credit and no money down. With a lease-option agreement, the seller establishes a monthly payment for the property, and the renter agrees to purchase the property within a reasonable period. Since a percentage of the monthly rent payments are credited toward the purchase price, the renter/buyer receives down payment assistance from the seller.2. Mortgage AssumptionBuyers may offer to assume responsibility of a property and use the seller's current financing. Mortgage assumptions assist home buyers with adequate means to meet the expense. In exchange for making mortgage payments, the buyer receives the property title. Before assuming a loan, research the original loan agreement and look for a "due-on-sale clause." This provision prohibits a mortgage assumption.3. No Money Down LoansZero down home loans or 100% financing is a simple way to buy real estate with no money down. To qualify, borrowers must have acceptable credit and verifiable income. Several zero down mortgage loans are available, especially to first time home buyers. These include select FHA and VA loans. Home buyers with no money down loans typically pay a higher rate and PMI (private mortgage insurance).4. Seller FinancingIf you canít afford the 20% down payment, ask the seller to increase the asking price, and seller finance a portion of the property. For example, increase the original sale price of $120,000 to $144, 000. The mortgage lender will agree to finance the lesser balance because itís 80% of the asking price. Next, the home seller carries a note for the balance of $24,000. After the closing, the seller may continue to hold the note, or sell the note.5. Borrow a Down PaymentFunds for a down payment can be borrowed from family, friends, or private investor. Discuss installment payments at fixed intervals, or repay money upon sale of the property. Other options include borrowing money from a life insurance policy or 401K.