10 Ways To Buy A Home With Little Or No Money Down
There are many ways to buy a home, even if you have little or no
money to put down. Here are a few of the basics:
1. Sweat Equity
Sweat Equity is a way to get a home by trading work for equity
in the house. This could be used for a down payment or for
purchase later. This is a great technique if you are handy with
tools, yard-work, and paint.
Look for fixer-uppers in neighborhoods you are interested in.
Many times these homes will have a hard time selling and the
owner is ready for just about any offer. You will find these
houses ranging from just needing a little "cosmetic" work like
landscaping or painting, to totally trashed out houses in need
of some serious renovation. If you are into repairs, this is a
great way to get a home for a good deal.
If you are not skilled at repairs and renovation, be careful
about fixer-upper homes. They could end up costing you quite a
large amount of money to pay others to fix.
I also recommend getting a home inspection so that you know what
exactly you are in for before you begin.
2. Seller Carry-Back
Look for a home with an assumable loan. Instead of buying out
the owner's equity, ask the seller to carry back a second
mortgage for the rest of the money owed. If you can get the
seller to carry all of the rest, you can get the home for no
money down.
3. Offer an Object for the Down Payment
Offer something other than cash (land, a car, a boat, or
valuable collectibles) to the seller instead of a cash down
payment. This is why it is important to listen to sellers. Find
out what they want and need. Maybe you have (or can get) just
what they need. For instance maybe they wanted to use the
down-payment to buy an RV and it turns out that you just happen
to have one you don't need. Offer that vehicle as a
down-payment, and it saves you from coming up with the cash.
4. Offer Services for the Down Payment
Offer your services or expertise to the seller in lieu of a down
payment. Some examples include $10,000 worth of auto services if
you're a mechanic, dental work if you're a dentist, desktop
publishing services if you're a designer, artwork if you're an
artist or legal work if you're an attorney.
5. Foreclosures
Look for foreclosure properties that require little or no down
payment. Some lenders and government agencies will let you buy a
foreclosure with no down payment if your credit is good and
they're anxious to have the home occupied, or if you have skills
(carpentry, landscaping or even painting) that you can use to
increase the home's value. Distressed properties - assume with
little or no down to save foreclosure.
6. VA or Other No Money Down Loans
Look for conventional loan programs such as VA or FHA that
require little or nothing down. VA loans have helps countless
veterans get into their homes. There are often programs
available to first time buyers or people who are distressed
(such as with Hurricane Katrina) that will help people get into
a home with little money down. You usually will have to qualify
for the loan with the bank, though.
7. Find an Investment Partner for Equity Sharing
Look for an investment partner who'll put up some or all of
the
cash in an equity-sharing partnership. You make the monthly
payments and the two of you split the eventual resale profits.
8. Wrap-Around Financing
Wrap-around financing is where you assume a seller's VA Loan by
doing a new Contract for Deed. Since this contract is flexible
and does not have to follow the old loan, you can ask the seller
to carry not only the loan amount, but the rest of the purchase
price of the house, letting you get in with little or no money
down.
9. Rent-to-Own or Lease-Option
This is really is one of the best ways to get into a home of
your own when you can't get a bank loan. Remember that you may
still have to get a loan down the line. If you have a
lease-option for 5 years, at the end of that time, you will need
to purchase the house, so you can use the time to fix your
credit, or use one of the other options that are discussed in
our book to purchase the house at that time. You can always try
to negotiate another 5-year lease-option if you need more time.
(For more detailed infomation on lease-options, check out our
free ebook, "Buying a Home When You Have Bad Credit" at http://I-can-buy.com.)
10. Government and Community Down-payment Programs
There are many community and non-profit organization programs
out there to help people get into homes of their own. Many of
these do no require any money down.
There are some organizations and programs that will pay for some
or all of the down payment for you. Generally these are for
lower to moderate-income individuals, but these days that
includes a lot of people. You also usually have to be able to
qualify for an FHA loan (which is somewhat easier than a
conventional bank loan.) If you have been unable to get into a
home because you don't have enough money for a down payment,
then maybe one of these programs will be for you.
Below is a list of organizations that have down payment
assistant programs:
* AmeriDream Inc. http://www.ameridream.org
* National Home Foundation http://www.nationalhom
efoundation.org
* GiftAmerica Program (GAP) http://www.giftamerica.org
* The Nehemiah Program http://www.nehemiahprogram.or
g
* New Song Down Payment Assistant Program http://www.buyers-assistanc
e.com
* Equity Grants http://www.equitygrants.com
* Realty America http://www.realtyamerica.org
* Homes For All Program http://www.ezdownpayment.com
Also check in your local area, because many communities have
similar programs of their own.
About the author:
This has been an excerpt of the FREE ebook by Alexis Dey called
"Buying a Home When You Have Bad Credit." Copyright © 2005-2006
Mohave Publishing. Don't let bad credit stop you from buying a
home. Check out the ebook at http://I-can-buy.com now to find
out how!
Written by: Alexis Dey
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