Is Buying a Home for Nothing Down
Easier than it Used to Be?
By Jeanette Joy Fisher
In the 1980s, Robert Allen hit the
big time with a bestseller called Nothing Down, a
real estate investment book telling people how to buy
properties for little or no up front investment. It was
a landmark book, offering dozens of ideas on what was
called "creative financing," and thousands of people
made millions of dollars using Allen's techniques.
But
are Allen's ideas still viable in today's marketplace?
The good news is that most of Allen's methods still
work. The better news is that many of his creative
financing techniques have become standard practice for
mainstream lenders. In fact, lenders have embraced a
number of Allen's ideas since Nothing Down
originally hit the bookshelves and use them to help
buyers get into homes with no money down--even buyers
with less-than-sterling credit.
The National Association of Realtors reported that in
2005 more than 30 percent of all home sales in the
United States involved some form of 100 percent
financing! Nothing down loans are especially popular
among first-time homebuyers (which is generally defined
as someone who hasn't owned either a condominium or
single-family home in the past two years).
Now the not-so-good news before you get too excited.
Mortgage lenders are getting more savvy all the time, so
they're getting good at recognizing qualified candidates
for zero-down loans. You'll generally need a verifiable
source of reliable income, and a good credit score.
However, even that is changing, because some lenders
have begun to offer "stated income" mortgages that allow
you simply to state your income without having to
provide income tax forms or other proof of
income--assuming you have good credit.
More not-so-good news: When you finance all your closing
costs, it means you'll be borrowing more money, which
translates to higher monthly payments. Some lenders will
loan you up to 125 percent of the home's purchase price,
to cover closing costs and necessary repairs or
upgrades; but you'll pay for that extra money handsomely
over the course of your mortgage, and sometimes at a
higher interest rate, so check the details carefully
before you sign the papers.
In short, it's much easier to buy a home for nothing
down than it was when Robert Allen first published
Nothing Down. The trick is to get into your home
with nothing down and be able to make the payments over
the long haul.
Copyright © 2006 Jeanette J. Fisher
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