Debt Free

There are several strategies that will enable you to get a property with no, or little, money down. One that has been all the rage for the past few years has been a 100% mortgage. That strategy may take a bit of beating due to the problems in the sub-prime mortgage market however. If that does indeed turn out to be the case, how else can you hope to acquire a property with no money down?

One way would be to take on partners. They could supply any cash needed for the down payment or closing costs. For many people, that’s just not an available option. Those rich uncles with cash dripping out of their pockets seem awfully hard to find these days. Even if it’s an attractive investment for both parties, you may not know where to turn for this sort for real estate transaction.

Another option that was used extensively in the past for this type of transaction is the assumable mortgage. An assumable mortgage is one that’s transferable between different parties. You can’t use this with just any mortgage. They’re not all assumable. Generally you can choose from FHA mortgages or some ARMs when it comes to selecting an assumable mortgage.

Look carefully before you assume a mortgage. Once you do so you’re by and liable for all the terms contained therein. Look at the interest rate, and all the clauses. Make sure, for example, that you’ll not get dinged by prepayment penalties in the event you want to refinance or pay off your loan early. You’ll need a down payment if there’s a difference between what the house is worth and how much is outstanding on the mortgage. If your main purpose is to get into a property with no money down, that’s not the property you’re looking for.

The bottom line is that you can get a spectacular home, and actually pay no money down if you can find one with an assumable mortgage, your credit is acceptable and it doesn’t have so much equity that you have to chip in any cash. Be prepared to do quite a bit of searching before you find one of these gems, however. You can’t just run down to your local assumable mortgage store and select the daily special.