How to Buy a Home with no Down Payment:

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Buying property without a down payment is getting increasingly difficult in these post sub-prime mortgage crisis days. The market is in tatters, there are over 3,000,000 empty homes out there and 1,000,000 people are faced with foreclosure. That means there are a lot of bargains coming onto the market and maybe this is a way to secure one.

What You Will Need:

A mortgage broker who is an expert in this field.
A good income.
An excellent credit rating (at least a 600 score).
Some savings.
It helps to be a first time buyer.

Step 1

Contact your Mortgage Broker and tell him what you want to do. If you don’t have one, find one! Personal recommendations are always the most satisfactory means of finding a good professional.

Step 2

Speak to your Broker. You will need to give him an indication of your earnings and your income debt ratio to help him in his task. The lender will need proof of this, but a good broker will help you with the paperwork.

Step 3

In these times you will probably not be offered many choices when it comes to lenders. The deals will be expensive, but pick the best one you can.

Step 4

The lender will require you to have Private Mortgage Insurance (PMI). This is calculated on a % of the loan divided by the length of the mortgage. On a $200,000 home loan you could end up paying between $250 and $300 per month, This makes sense if you have picked up a bargain and hope to turn it for a profit in the near future but for normal living requirements think carefully.

Step 5

The lender will want to see evidence that you have savings or capital of some sort. Make sure you can provide this proof in some manner.

Step 6

First time buyers have a huge advantage here. Their status qualifies them for low cost down payment loans that are federally funded. If you don’t have savings this is a good way to go, providing you can prove you are a first time buyer.

Step 7

The lender will try to force you into taking out an adjustable rate mortgage. Again this is fine if you expect to re-sell the house at profit in the near future, but in a long-term scenario this could be a very expensive choice. If interest rates set by the Fed rise, so will your mortgage payments. This can sometimes put people under insupportable financial strain. If you are in for the long term insist on a fixed rate product.

Tip:

I understand about property speculators and first time buyers but why would anyone else want to go down this road? If you are so cash rich as to qualify for a no down payment mortgage, then there must be a better way to go! Unlesss………….

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