Welcome to the first Buyer’s Stash Podcast where you will get brand new information every month right here, all related to the subject of everything you need to know about buying a home in today’s market. I’ll have a different topic every month based on what people have asked me, or have recently asked me about the home buying process.
My name is Josh Hayles and I would like to get started with this month’s theme which is called, How to buy a home for low down payment…
Now I started this service because many people still think they need 10’s of thousands of dollars to buy a $150,000 to $250,000 home these days. You may have talked to Realtors or lenders that told you you will need 15, 20, or even 30 thousand dollars to buy a home! 5 years ago that may have been the case but it’s no longer true. As a matter of fact, right now there are several government backed home loans that enable you to buy with as little as 3.5% down! So lets look at our options…
Option 1: FHA Loans
Although this isn`t a “No Money Down” option, the FHA
loan is by far one of the best alternatives for people who
want to buy a home and don`t have much money to put
down. With an FHA loan, you could put down as little as
3.5%. Plus, FHA loans are easier to qualify for.
Now, 3.5% may seem like a lot to come up with, but many
people find that when they put their minds to it, 3.5% is
actually possible. While you can`t “borrow” the 3.5%, you
can get a “gift” from a family member or borrow from your
401k, for example.
FHA loans do have requirements and restrictions. Not all
townhomes and condos qualify, and there is a maximum
loan amount you can get. But if you`ve been dreaming of
a new home and think you might be able to “scrounge up”
3.5%, this is a great way to go.
Option 2: HDA Loans
Some Housing Development Authorities have a first-time
homebuyers` program that offers below-market, fixed-rate,
15- or 30-year loans. There are restrictions as to
maximum household income, as well as the price of the
home you are buying. Not to mention these loans are rare.
The only disadvantage with this loan is that if you sell the
house before the end of the loan term, you may have to
“pay back” a portion of the subsidy used to get the lower
interest rate. However, if you`re a first-time homebuyer,
this may be an option to consider.
Option 3: Special Negotiating
Special negotiating means that if you find the right house
And the right seller, you may be able to pay more for the house
and have the seller pay all of your closing costs! That
would mean all you have to bring to the table is your
3.5% down payment! So, how do you find out what type of loan programs are
available for you right now? The best way is to work with
an experienced real estate consultant who keeps up to speed on these
things.
Option 4: Owner Financing
Owner financing means exactly that: The owner (or seller)
finances a portion of your home purchase. For example,
you might borrow 80% of the value of a home from a
lending institution, and “borrow” the other 20% from the
owner. In this situation, the owner “carries back” a second
mortgage.
Owner financing can be advantageous, especially to
investors who buy up properties and then rent them out.
For the average homebuyer, however, owner financing is
difficult to find and requires some tricky negotiating. Even
after successfully negotiating a transaction, it requires
some detailed work by qualified attorneys in order to
protect the interests of all parties involved.
While you shouldn`t rule out owner financing, keep in mind
that by looking for someone who is willing to help finance
your purchase, you severely limit your choices. There are
a lot of houses for sale today, but not a lot where owner
financing is an option.
Option 5: Lease-To-Own
With a lease-to-own, you essentially lease a home, but
make larger payments in order to begin accumulating a
down payment. For example, if a house would normally
lease for $800, you might lease it for $1,000/month, with
$200/month going into a special account. At the end of a
specified period, you buy the home using the money in that
special account as your down payment. However, if you
decide somewhere along the line not to purchase the
home, all of the money in the special account then
goes to the seller.
Think of this option as renting with a forced savings
account. If you can find someone willing to do this, it`s
not a bad option. However, most people who are selling
their homes need their money out of it in order to buy
their next home, so finding someone who is willing to lease
to you may prove more difficult.
Where To Begin
Now that you have five good options for buying a home for
little money down, where is the best place to begin?
The first step is getting pre-approved. And the best way to
get pre-approved is to let us refer you to a Mortgage Consultant who is
dedicated to helping people like you get into the home of
your dreams. So if you’re curious about your financing options please call
us at 409 739 7709 or email me at josh@joshhayles.com and we’ll set up
a specific time for you to meet and talk with one of our mortgage advisors.
Until then, thank you for listening and make sure you subscribe to Buyer’s Stash
so you are kept up to date with new news and information.
Or - you can simply fill our the form for a Home Loan Report from www.SearchPearland.com
Take care.