November 11, 2012,
Category: Home Purchasing, Release with 4 comments
Is there a possible way to get a home or home loan without the heavy downpayment. I know if you have good credit that is a way to lower things, but what else?
What are the best ways to get a home with little to no money down?
The days of little to no down payment are now history, unless you obtain a house using a FHA loan. Minimum down payment with FHA is 3.5% of the purchase price of the home. As well, you will need a few thousand additional dollars to cover closing costs associated with the loan. Using a conventional financing institution, expect to be required to have not less than ten percent down, if you have EXCELLENT credit.
If you are a real estate investor then you want to use as little of your own money as possible because in business you want to get to a positive cash flow event. Now as for your personal home the more money that you put into your home the less money you will have to finance and the lower your monthly payment will be. And the other benefit is that you can get a better rate from a lender because your collateral will be worth more to them . Let’s say you are buying a 200 thousand dollar house and you have 100 thousand dollars that you could put into the down payment of this house. you would then be financing 100 thousand dollars. now if your house appraised for 200 thousand and you would have a first mortgage of 100 thousand then you would have strong paper and 100 thousand dollars in equity in your house. Now if you financed this house it would be more attractive to a lender than say a house that was appraised for 200 thousand dollars where you only were putting down 5 thousand of your own money and looking to finance the balance. Now there are many different scenarios where this could make sense however each deal is different and deals are like shoes in that even if you have a very nice pair of shoes that are a size 9 and you wear a size 12 then the shoes are going to hurt your feet so look carefully at your situation before you buy something off the rack. Make sure what ever you do fits you and your situation and not just a case study from a book. Of course to tie up 100 thousand dollars of your money may not be what you want to do however look at the front end and the total financed payback amount and do your due diligence and study and see what makes the most since for you. If you put in a large amount of up front cash and the paper is seasoned and you need cash later on you could probably get a second mortgage still at a fixed rate and still be better off with your mortgage payment and all of your expenses in proportion to your income or your cash on hand.
There is financing out there for everyone. It depends on what you are looking for. There still is 100% financing with USDA. The most helpful thing is to have a good realtor that is knowledgeable about financing and knows the real estate market t help you find the best fit for you.
There are NONE If you cannot save enough for the down payment and closing costs then you cannot afford to buy a home. All the foreclosures are proof of that
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