Is that even possible? Well, fortunately, it is. Buying no money down property means that you are obtaining an asset without depositing a down payment. There are several ways one can be able to obtain a house using this method. You simply need to research one that suits your situation.
Moreover, there is plenty about property investment and acquisition through no money down method. Therefore, it is advisable to do your due diligence to ensure that what you have is what you needed and that you are not surcharged in the process.
Find out how you can buy a house without putting a down payment in the property as discussed below.
Using Borrowed Money
This is the first idea that comes to mind for a person looking to buy a house with no money down. Therefore, you can find a lender who is willing to offer credit with low or no interest rate. This can be a difficult venture since lenders are out there to earn on that interest.
An alternative is to look for a friend or family who is willing to advance you all that money for that property. Chances are that you may not find one. However, if you do, there is a likelihood that the relationship between the two of you may never be the same.
This brings you to the third option and that is the hard money lenders or the home equity loans. These loans have varying rates depending on your equity in the property. If you have more than enough equity – meaning that you have a substantial share of the house, then a lender may give you up to 90% on the property. Home equity loans usually have lower rates of interest. The same however cannot be concluded for hard money lenders.
Using a Lease Option
This option targets real estate investors and homebuyers alike in that it allows you to pay for a house using rent. Basically, you need to rent a house and enter an agreement to be paying higher rent charges such that the extra amount on the rent income is converted into monthly instalments while the rent is the interest on the property. This strategy can be an invaluable tool for achieving ownership of a house without necessarily paying for a down payment.
Assume the Existing Mortgage
The +viability of this method of ownership may be a little compromised but it is achievable all the same. Here, the buyer negotiates a deal with the owner of the property to assume payment of the remaining mortgage on the property as a down payment instead of putting down money on the same.
If the rates of interest on the property are affordable for the buyer, it may be one of the best deals you struck in a lifetime. You, however, need to do your due diligence to confirm that the type of mortgage on the property is transferable for not all of them are.
Co-Investment
This may little be a grey area for homeowners for it works best for property investors. If you do not have sufficient funds to pay for the down payment, you can look for professional investors, friends or family members to come together and contribute to pay for the total cost of the property value. With homeownership, this may become true only if you are partnering with your spouse.
Note that the risk is spread among the parties involved in the deal. When one member withdraws due to financial constraints or death, or bankruptcy, then the remaining members have to increase contribution to cover for the costs. The initial share shall be Imbalanced and therefore, it becomes difficult to share the proceeds.
Another form of co-investment occurs when investors use their central provident fund (CPF). Say, one investor qualifies for a loan but cannot afford down payment. While the other can raise the money needed for the deposit but cannot qualify for a loan. So, the two get into an agreement where they tap together their strengths to finally afford the cost of the asset. Homeowners can do the same.
Seller Financing
If you got a desperate seller, it would suit both of you and especially you if you got to make the seller pay the down payment on the property. This means that as you pay for the cost of the property, the seller helps to finance the down payment. In the end, you will have bought the house at a no money down basis.
The agreement with the seller will define the period for which you will be required to pay up the money on the down payment which acts as a loan. In fact, the seller sets the interest rate on the credit.
Exchanging Properties
Can you exchange your house for another? Well, this is also a viable method of purchasing a home. Barter trade also works well in these instances. A professional evaluation is required to know the real value of the properties. You can exchange a commercial building for a home. If there are any disparities in the values, you will be compensated with money on top of the house.
Offering a Higher Price on the House
This can be disadvantageous to you but it is still an option you can explore. Buyers usually look for a bargain. Nut, if by offering no money down makes you want to pay more, then is a feasible idea. The advantage is that you will pay the cost together with the instalments rather than as a solid cheque.
Final Words
Real estate industry has a lot of options that you can explore on your quest to find a home. These options are not always meant for payment of the cost of the property without a down payment. However, there are many options for this model as well. The most popular ones are listed above. Before settling for any of them, ensure you do your read search even by involving a real estate broker to understand the implication of many of the projects you may be undertaking. You can as well contact us at fortune credit for more insight on the subject.