Buy a home with no money down: 6 ways you can do it

When Janette Jones of Gwynn Oak, Maryland, got ready to buy a town house last year, she discovered that a down payment and closing fees would cost nearly $10,000, taking a significant chunk of her savings. But because her credit score was above 620, she qualified for a loan that covered not only her down payment but her closing costs as well. "It was more important for me to keep the cushion I had in the bank for whatever happened after I moved into the home," she says. "The stove could have gone out the next day, or my car could have broken down two weeks later." Jones is among the 42 percent of first-time home buyers who paid zero down in 2004, according to the National Association of Realtors. Until recently the standard down payment was 20 percent of the purchase price, and the highest barrier to home ownership was the lack of cash. Then along came programs that required as little as 3 percent down. And today's zero-down programs are flinging open the doors to home ownership even wider. They're so popular "because many people with decent credit just don't have the money they need for a down payment," says Marcia Griffin, president and founder of Washington, D.C.-based HomeFree-USA, a nonprofit home-ownership organization. Consider these six options and how each might work for you:

1. GOOD CREDIT Many lenders offer 100 percent financing to those with good credit scores, typically above 580. The financing often comes in the form of two loans: one with a low interest rate for 80 percent of the cost and another with a higher interest rate for the other 20 percent. If your credit score is 620 or higher, you might qualify for loans that cover 103 percent, 104 percent or 107 percent of the sale price, with the additional funds going to closing costs. Mortgage-funding organizations Fannie Mae (fanniemae.com) and Freddie Mac (freddiemac.com) have 100 percent financing programs available. For instance, Fannie Mae's Flexible 100 plan covers the down payment, while you pay as little as $500 toward closing costs. The two organizations can steer you to financial institutions that offer these loan products. However, if you pay nothing down and no closing fees, your interest rate will be higher, and you'll pay interest on the total price plus the closing costs. "If you bring $2,000 or $3,000 to the table in the beginning, you would have thousands of dollars less to pay on the back end," says Sharron Murphy-Williams, executive director of the Ph6be Foundation, a financial-literacy organization in Cleveland.
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2. GOVERNMENT GRANTS In 2004 76 percent of Whites owned their own home, compared with only 49 percent of Blacks. As part of a plan to eliminate this home-ownership gap, federal, state and local governments issue down-payment grants to mortgage applicants with low incomes. Programs like the American Dream Downpayment initiative (ADDI) provide down-payment, closing costs and rehabilitation assistance to income-eligible home buyers. Check out the Department of Housing and Urban Development Web site (hud.gov) for a list of funds available from state and local governments and nonprofit organizations. Contact your state's Department of Housing and Community Development to ask about grants. "Many states have grants they don't use because people don't know they exist, and the government isn't really marketing them," Griffin notes.

3. FIXER-UPPER FUNDS If you're eyeing a property in need of repair, especially one in a neighborhood targeted for community revitalization, you may qualify for government programs offering fixer-upper loans. While properties that fall under such programs may need major renovations, a fixer-upper grant usually covers all the costs. Again, check with your state's Department of Housing and Community Development.

4. GIFT PROGRAMS Down-payment-assistance gift programs provide home buyers with between 3 and 6 percent of the sale price. While you don't have to pay this money back, you must buy a home that's part of the gift program because the funds come from sellers' donations. A number of nonprofit organizations offer down-payment assistance, including the Nehemiah Corp. of America (nehemiahcorp.org), AmeriDream, Inc. (ameridream.org), and Neighborhood Gold (neighborhoodgold.corn). You can also find a list of other down-payment-assistance organizations on the Home Gift Providers Association Web site (downpaymentalliance.org). These programs generally have no income requirements, but applicants must be eligible for a loan from a participating lender.

5. SELLER ASSISTANCE If the seller is in a rush to unload her home, you may be able to negotiate with her to pick up some of your costs. "Many times when you buy a home, the seller will agree to give you 3 to 6 percent to cover your closing costs," says David C. Harty, vice-president for legal affairs, Residential Home Loan Centers in Laurel, Maryland. If the seller is unable to find other buyers, you might also set up a "lease purchase" agreement in which you sign a contract to buy a home at a set price in a year or two, while living in it and paying rent. The seller generally will allow some of the rent money to go toward the purchase, which can eliminate the need for a down payment when it's time to close on the sale. You also benefit if the home's value rises because the purchase price is locked in.
6. MILITARY SERVICE If you're a veteran or currently in the military, you may qualify for a no-down-payment loan through the Department of Veterans Affairs. Check the department's Web site at homeloans.va.gov for a list of VA-approved lenders.

ZERO-DOWN CHECKLIST

Many no-money-down programs have hidden costs and risks, so keep these tips in mind before doing a deal:

GET INFORMED. For first-time home buyers, "It doesn't matter how much you know, you should get into a home-buying class," advises Sharron Murphy-Williams of the Phebe Foundation. "Then you can go to the bank equipped to ask intelligent questions about zero-down-payment loans."

LEARN THE COSTS. Ask your lender how much you'll be paying over the course of the mortgage with and without a down payment, then decide whether a fixed-rate or adjustable-rate mortgage (ARM) best fits your budget. Also evaluate gift programs; sellers contribute a portion of the down payment, so there's a chance the price will be inflated to cover that loss.
Advertisement

FIND A SUPPORTING CAST. Have an attorney or a real-estate professional look over all paperwork, because predatory lending is prevalent with many no-money-down deals, Murphy-Williams cautions.

ASSESS THE NEIGHBORHOOD. "Make sure you're in an area that's appreciating and not declining," advises David C. Harty of Residential Home Loan Centers. A decline in market value means you could be stuck owing more than your home is worth.

MAINTAIN A CASH CUSHION. Even if you can get a home without cash, don't buy unless you have money in the bank. Harty notes, "Individuals who say they don't have $350 for an appraisal might not be the best candidate for a 107-percent loan."--T.E.H.

COPYRIGHT Essence Communications, Inc.

Buy a home with no money down: 6 ways you can do it

When Janette Jones of Gwynn Oak, Maryland, got ready to buy a town house last year, she discovered that a down payment and closing fees would cost nearly $10,000, taking a significant chunk of her savings. But because her credit score was above 620, she qualified for a loan that covered not only her down payment but her closing costs as well. "It was more important for me to keep the cushion I had in the bank for whatever happened after I moved into the home," she says. "The stove could have gone out the next day, or my car could have broken down two weeks later." Jones is among the 42 percent of first-time home buyers who paid zero down in 2004, according to the National Association of Realtors. Until recently the standard down payment was 20 percent of the purchase price, and the highest barrier to home ownership was the lack of cash. Then along came programs that required as little as 3 percent down. And today's zero-down programs are flinging open the doors to home ownership even wider. They're so popular "because many people with decent credit just don't have the money they need for a down payment," says Marcia Griffin, president and founder of Washington, D.C.-based HomeFree-USA, a nonprofit home-ownership organization. Consider these six options and how each might work for you:

1. GOOD CREDIT Many lenders offer 100 percent financing to those with good credit scores, typically above 580. The financing often comes in the form of two loans: one with a low interest rate for 80 percent of the cost and another with a higher interest rate for the other 20 percent. If your credit score is 620 or higher, you might qualify for loans that cover 103 percent, 104 percent or 107 percent of the sale price, with the additional funds going to closing costs. Mortgage-funding organizations Fannie Mae (fanniemae.com) and Freddie Mac (freddiemac.com) have 100 percent financing programs available. For instance, Fannie Mae's Flexible 100 plan covers the down payment, while you pay as little as $500 toward closing costs. The two organizations can steer you to financial institutions that offer these loan products. However, if you pay nothing down and no closing fees, your interest rate will be higher, and you'll pay interest on the total price plus the closing costs. "If you bring $2,000 or $3,000 to the table in the beginning, you would have thousands of dollars less to pay on the back end," says Sharron Murphy-Williams, executive director of the Ph6be Foundation, a financial-literacy organization in Cleveland.
Advertisement

2. GOVERNMENT GRANTS In 2004 76 percent of Whites owned their own home, compared with only 49 percent of Blacks. As part of a plan to eliminate this home-ownership gap, federal, state and local governments issue down-payment grants to mortgage applicants with low incomes. Programs like the American Dream Downpayment initiative (ADDI) provide down-payment, closing costs and rehabilitation assistance to income-eligible home buyers. Check out the Department of Housing and Urban Development Web site (hud.gov) for a list of funds available from state and local governments and nonprofit organizations. Contact your state's Department of Housing and Community Development to ask about grants. "Many states have grants they don't use because people don't know they exist, and the government isn't really marketing them," Griffin notes.

3. FIXER-UPPER FUNDS If you're eyeing a property in need of repair, especially one in a neighborhood targeted for community revitalization, you may qualify for government programs offering fixer-upper loans. While properties that fall under such programs may need major renovations, a fixer-upper grant usually covers all the costs. Again, check with your state's Department of Housing and Community Development.

4. GIFT PROGRAMS Down-payment-assistance gift programs provide home buyers with between 3 and 6 percent of the sale price. While you don't have to pay this money back, you must buy a home that's part of the gift program because the funds come from sellers' donations. A number of nonprofit organizations offer down-payment assistance, including the Nehemiah Corp. of America (nehemiahcorp.org), AmeriDream, Inc. (ameridream.org), and Neighborhood Gold (neighborhoodgold.corn). You can also find a list of other down-payment-assistance organizations on the Home Gift Providers Association Web site (downpaymentalliance.org). These programs generally have no income requirements, but applicants must be eligible for a loan from a participating lender.

5. SELLER ASSISTANCE If the seller is in a rush to unload her home, you may be able to negotiate with her to pick up some of your costs. "Many times when you buy a home, the seller will agree to give you 3 to 6 percent to cover your closing costs," says David C. Harty, vice-president for legal affairs, Residential Home Loan Centers in Laurel, Maryland. If the seller is unable to find other buyers, you might also set up a "lease purchase" agreement in which you sign a contract to buy a home at a set price in a year or two, while living in it and paying rent. The seller generally will allow some of the rent money to go toward the purchase, which can eliminate the need for a down payment when it's time to close on the sale. You also benefit if the home's value rises because the purchase price is locked in.
6. MILITARY SERVICE If you're a veteran or currently in the military, you may qualify for a no-down-payment loan through the Department of Veterans Affairs. Check the department's Web site at homeloans.va.gov for a list of VA-approved lenders.

ZERO-DOWN CHECKLIST

Many no-money-down programs have hidden costs and risks, so keep these tips in mind before doing a deal:

GET INFORMED. For first-time home buyers, "It doesn't matter how much you know, you should get into a home-buying class," advises Sharron Murphy-Williams of the Phebe Foundation. "Then you can go to the bank equipped to ask intelligent questions about zero-down-payment loans."

LEARN THE COSTS. Ask your lender how much you'll be paying over the course of the mortgage with and without a down payment, then decide whether a fixed-rate or adjustable-rate mortgage (ARM) best fits your budget. Also evaluate gift programs; sellers contribute a portion of the down payment, so there's a chance the price will be inflated to cover that loss.
Advertisement

FIND A SUPPORTING CAST. Have an attorney or a real-estate professional look over all paperwork, because predatory lending is prevalent with many no-money-down deals, Murphy-Williams cautions.

ASSESS THE NEIGHBORHOOD. "Make sure you're in an area that's appreciating and not declining," advises David C. Harty of Residential Home Loan Centers. A decline in market value means you could be stuck owing more than your home is worth.

MAINTAIN A CASH CUSHION. Even if you can get a home without cash, don't buy unless you have money in the bank. Harty notes, "Individuals who say they don't have $350 for an appraisal might not be the best candidate for a 107-percent loan."--T.E.H.

COPYRIGHT Essence Communications, Inc.

5 Ways To Neutralize The Dominantly Negative Co-Worker

It was the tale of two airlines, though in each case the planes carried the same insignia and the personnel were paid by the same corporate coffers.

During my first trip to Florida, I was on a flight where the attendants were noticeably cheerful, enjoying themselves, each other, and the passengers, and they seemed genuinely eager to please.

On my second trip, a few days later, a different crew was grouchy and nonverbally venomous.

All of those flight attendants seemed to be in a siege mentality, barricaded behind frowns, and eager to be offstage, as far as possible from the customers as they could get.

“What made such a difference?” I wondered, as I was strapped into my seat, observing the second crew as it went about its sorry business.

Then I noticed the most senior member of the staff was the most acerbic. He looked peevish, prickly, and totally out of sorts, and his mates, who were co-hosting the serving carts, took on his demeanor.

In fact, they seemed to be playing up to his dour personality, almost trying to outdo his displays of contempt for the passengers.

I caught myself wondering, “Could one person have such a negative impact on the whole team?"

And without hesitating, I knew the answer was “Yes.”

I was watching it happen.

In fact, sourpusses spoil lots of workplaces, but this time it was obvious because we were all confined, coexisting in a flying tube. There was no escaping the negativity.

Of course, it got me to thinking, what can we do to at least neutralize the impact of a negative personality, a venom spitter?

Here are five things that come to mind:

1 Ask them directly and quickly after observing their bad vibes: “Is everything all right with you?” Then, if they disclaim any problems, explain briefly “I just thought maybe you weren’t feeling so well because you seem so, uh, SERIOUS!”

2 Boldly walk up to them and say: “Smile, you’re on Candid Camera!” They’ll be baffled, temporarily, but it may be enough to bring a grin to their lips.

3 Tell them a joke.

4 Say: “You look like I feel; so cut it out! Let’s put on a happy face, shall we? The show must go on!”

5 You might offer to fill in for them for a few minutes. “You look like you could use a break, a little attitude adjustment. Can I help? Want to take a few minutes to yourself?”

Each approach gives the offender feedback as to how he’s coming across to others, and he might be oblivious to it, until you bring it up.

So, don’t suffer in silence.

By taking action you’ll do everybody a favor, including those negative people!
Best-selling author of 12 books and more than 900 articles, Dr. Gary S. Goodman is considered "The Gold Standard"--the foremost expert in sales development, customer service, and telephone effectiveness. Top-rated as a speaker, seminar leader, and consultant, his clients extend across the globe and the organizational spectrum, from the Fortune 1000 to small businesses. He can be reached at: gary@customersatisfaction.com.

Article Source: http://EzineArticles.com/?expert=Dr._Gary_S._Goodman

5 Ways To Buy Real Estate With No Down Payment

When I got my start in the real estate investing game, it seemed very hard to learn any actual way to buy properties without any money out of my pocket. To say the least, I was discouraged. To save some of our newer members the same frustration, here are 5 tried and true "no money down" real estate investing methods.

The Owner Finance

Quite simply put, this is what happens when the owner owns the property free and clear and extends credit to you in the form of a note and mortgage. If you negotiate the owner finance correctly, you can get into the property with no money down. What's more, if you're really sharp in your negotiations, you can get a pretty nice interest rate as well. The downside of this method is that most owners simply won't do it. There are those who will, but they are a tiny minority among motivated sellers, and even a smaller minority among sellers in general. If you can negotiate an owner finance, good for you! If not, maybe one of these other methods will work better for you.


The "Blanket" Mortgage

The blanket mortgage is one of my least favorite methods, for one simple reason: benefit. The seller gets the tax benefits while the investor pays down the mortgage. In a blanket mortgage deal, you (the investor) makes payments to the property owner which exactly match the owner's mortgage/insurance payments. The owner then pays his mortgage & insurance in kind, getting all the benefits of ownership without paying in a dime. Another pitfall of this method is the possibility of a dishonest seller taking an investor's money for 3-4 months until the bank forecloses, then filing bankruptcy, thereby keeping the house and the investor's money and leaving the bank and the investor in a lurch. You can use this method, but be very careful!

The Partner / Backer

This method can be very lucrative for you and for your partner/backer. Simply, you find someone who wants to invest their cash into your deal, while you invest your time, knowledge, negotiating skills and other efforts. You can split the profit any way you like, and none of the money for a deal comes from you!

The Assumption

Some day people will write songs praising assumable real estate loans. Until then, let me give you a short background on them. An assumable loan is a loan anyone may assume as long as they meet the lender's qualifications for credit score, employment history, etc. Once upon a time the FHA and VA both offered assumable loans with NO qualifying. All you had to do to assume one of these loans was fill out a form and send the agency around $50. There are still some FHA/VA assumable loans out there, but not many. On December 1, 1986, the FHA stopped allowing non-qualifying assumptions and on February 29, 1988, the VA did the same. If you can find an FHA or VA loan issued before these dates, chances are it is still fully assumable without qualifying.

The Lease/Option


My favorite method of property acquisition, the lease/option is both wickedly simple and highly profitable - a combination most investors truly love. In a lease/option, you enter into what is basically a normal lease agreement. The only difference is in the option. An option is just what it sounds like - it's an option to buy a property at an agreed-upon price within a certain span of time. When you put them together, you end up with a rent-to-own scenario. You pay rent each month, the seller credits a certain amount of the rent toward your purchase price. If you decide to buy the property within the option period, you just give the seller a check and get the deed. If you decide not to buy the property, you've still controlled the property for that period of time. Controlling is sometimes better than owning. If you control the property, you don't pay the property taxes. You also don't pay homeowner's insurance. You don't pay renter's insurance, either - your tenant/buyer does. You collect a check once a month, send the seller his share and keep the difference. And each time you put a new tenant/buyer into your property, you collect another option consideration (which is similar to a down payment but usually smaller and 100% non-refundable). The benefits of lease/options are various and sundry, but for this article, suffice it to say it's a great way to acquire/manage real estate.

Real Estate Brokerage: A Management Guide

Keep in mind that this list is by no means all inclusive. There are literally hundreds of ways to buy or control real estate with none of your own money. These methods should get your creative juices flowing and help you to come up with others on your own.

Source: http://www.articlestree.com/
Autor: David Jaymes.