Stop Paying Rent - How to Move into a New Home
with NO MONEY DOWN!
Paying rent
is like pouring money down the drain. You make
mortgage-sized payments, but you’re not building any equity,
you’re not receiving any tax breaks, and you don’t enjoy any
of the advantages of home ownership. For most people it’s
not the size of the monthly payment that’s necessarily
keeping them from buying a home, but the daunting task of
saving up enough money for that 5 –10% down payment which is
typical of most traditional conventional loan programs. But
times have changed. Non traditional loan programs which
require “no down-payment” are now widely available. And
while better loan programs and rates are available if you do
have a down payment, the fact is you now have options. You
do not have to let your lack of down payment savings keep
you in the rent trap. In most cases YOU CAN BUY A HOME WITH
NO DOWNPAYMENT.
What if my credit is only fair to poor?
Believe it
or not, you don’t need perfect credit to receive 100%
financing. That’s right. You can finance 100% of your
purchase with fair credit, although you may need to be able
to cover some closing costs, which generally total 3.5% -
4.5% of the loan amount. But, in most cases, the seller can
pay most if not all of your closing costs.
Things to consider for less than average credit:
· If
you can prove your rent history, that’s very helpful.
Cancelled checks or verification from a property management
company are ideal.
· You’ll
need to be able to document income over the last two years.
· It’s
best if you have some active credit accounts in good
standing, or at least had them open within the past 2-3
years.
· It’s
best if you have at least one credit account with a 24+
month history, whether there’s a balance or not.
· If
you don’t have credit accounts, you’ll need to show accounts
such as utilities.
· It
is sometimes ok to have consumer late payments and
collections, even bankruptcy. Bankruptcies will generally
have to be discharged at least 2 years to be eligible for
100% financing.
What are my options with good to excellent credit?
If your
credit is good, in addition to zero down financing, you may
be able to roll in and finance up to 7% of the loan amount
to cover closing costs, for 107% financing. Or 103%
financing combined with 3% seller contributions, and you
could end up getting into your new home with very little to
no money out of pocket.
Trick of the Trade - Get The Seller To Pay Your Closing Cost
Ever heard
of Seller Concessions? That’s where the seller contributes
money towards your closing costs. Now why would a seller do
that? Actually, it’s done through a trick of the trade. You
simply agree to raise the selling price of the home and the
difference is then credited back to you from the seller. For
example, the original price is $100,000. You agree to allow
the price to be $103,000, assuming it will appraise for
that. The seller then contributes $3000 to you at closing,
giving you $3000 towards your closing costs, and they still
get their $100,000 originally expected for the sale of the
home.
What are my first steps?
The first
thing you want to do is speak with a mortgage broker to
determine if you’re in a position to obtain a loan. If it
seems likely, you’ll want to go through an application and
credit check with that mortgage broker so they can gain a
full understanding of your situation and prepare to shop
your loan to wholesale lenders on your behalf. Once you are
pre-approved for a loan, you then want to start shopping.
YOU SHOULD NEVER START SHOPPING FOR HOMES UNTIL YOU ARE
PRE-APPROVED
First of
all, real estate agents spend a lot of time taking
prospective homebuyers to view homes. It’s very frustrating
to them when they dedicate themselves to someone who ends up
not being a serious buyer, or who cannot afford the homes
they were looking at. You will receive a much higher
priority if you are able to show the agent and seller that
you are pre-approved and serious.
Secondly,
this is a fast moving market. If you wait until you find
your dream home to begin the loan process, you could easily
lose the home to another bidder’s contract while you work on
your pre-approval. Being pre-approved first allows you to
submit a contract immediately, and increases your chances of
securing the home you want.
FIND OUT WHAT YOU QUALIFY FOR
FREE PRE-APPROVALS
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