can buy your Oklahoma home it NO MONEY DOWN!
In this difficult economy where stock valuations are questionable,
one of the best investments is real estate. But for many potential
buyers, the problem is coming up with a down payment to make
this all-important purchase. This should not be the case.
It is possible to buy a home with nothing down, meaning no
down payment. There are several methods by which eligible
home buyers can minimize or even eliminate down payments.
They include: VA loans, Owner financing, Lease/purchase, House
trading, Job-related federal programs, and State and local
Loans - The method of purchasing a home with no
down payment that most people are familiar with is through
the Department of Veterans Affairs, or VA. This benefit is
available to active and retired members of the military service,
veterans, POW's and MIA's and their unmarried widows. All
branches of the service including the Coast Guard are eligible.
Also members of Selected Reserves or National Guard who have
completed six years may be eligible along with many with WW
II service from the merchant marines, military academies and
others pulled into service for the war effort. Many older
veterans may recall a time when they were entitled to use
this benefit only once in their lifetime. This was changed
in 1989. Now, the only existing stipulation is that an eligible
person may use this benefit on only one house at a time. As
with all VA loans, the house must be used as a primary residence.
It may not be a rental home or second/vacation home. There
is no maximum home loan amount. Nothing-down VA foreclosures
available to everyone What many people do not know is that
you do not have to be a veteran to purchase a VA foreclosure
with nothing down. VA foreclosures are available to the general
public. Some require nothing down or just a fee of $500. Although
the homes are sold from the VA, purchasers must obtain conventional
or FHA loans unless they are veterans or active military.
VA foreclosures with nothing down or $500 fees can be found
among those from banks, lending institutions and federal agencies.
Financing, Lease-Purchase - If a glut of unsold
homes develops in a market, some sellers -- especially those
in a hurry -- become willing to assist the buyer. There may
be additional pressure on sellers of used homes when they
compete with builders in their areas who fund down payments
on new homes. These sellers may agree to lease-purchase or
owner-financing plans. In both cases, purchasers do not pay
down payments to acquire the properties. Although they allow
a home buyer to purchase a home with no money down, these
programs can be good and bad for the purchaser and should
be approached with caution. As with any legal transaction,
you should use a standard legal form. Lease-purchase forms
are obtainable at most major office supply stores. Owner financing
contracts are not readily available and will have to be drafted
by an attorney. In the case of lease/purchase agreements,
the seller agrees to a price that he will sell the house for
at some future date and the buyer usually pays a monthly amount
several hundred dollars more than what the home would receive
as a rental. Depending on how the agreement is written, this
additional money can be a "down payment" savings plan. A portion
of the additional money can be returned to the buyer when
the house is sold and used as a down payment. If the buyer
decides not to buy the house, all additional moneys are forfeited.
If the buyer decides to complete the transaction, he or she
would secure a mortgage from a lender. These arrangements
are similar to those in owner financing except in that case
the seller is the lender. There are two areas of concern for
the buyer with these types of purchasing options. In both
cases, because the buyer is not paying a mortgage company
he does not receive any of the tax deductions for the interest
on the house payments. This may be an acceptable trade-off
for the ability to purchase a home without a down payment.
The second area of concern requires more judgment. Because
the buyer is paying the seller each month instead of a mortgage
company, if the seller were to go bankrupt or lose the home
in foreclosure, the buyer's entire investment might be lost.
But on the flip side, there have been several occasions where
persons have entered into lease-purchase agreements and then
found purchasers for the homes at amounts much greater than
the selling prices contractually agreed upon. The lessees
bought the houses from the sellers and then resold the houses
for a large profit in the same day.
Trading, Lines of Credit - Many professional investors
acquire homes with no money down by trading one property for
another. In some cases, they trade one large property for
several smaller rental properties. Or they trade houses in
different cities to acquire a vacation or retirement home.
Property trading is also a legal way to avoid the capital
gains associated with selling a property. Another way to acquire
a property with no money down may be with a line of credit
secured by the equity in another property. This allows the
homeowner to purchase another property using the accumulated
equity in a home without selling the original property.
- The Office of Housing and Urban Development (HUD) offers
special financing for first-time home buyers. This program
is based upon need and is designed to allow low-income families
to obtain their first home without a significant down payment
or closing fees. Also, many HUD foreclosure homes require
no down payments.
Federal Programs - The federal government also
has programs to help farmers and police personnel acquire
homes with nothing down. For those with limited income who
wish to live in rural areas, the Rural Economic and Community
Development Administration offers farmers home loans with
nothing down. Monthly payments may be subsidized and the interest
can be as low as 1 percent. To encourage police to occupy
homes in crime-targeted areas, special federal programs permit
police officers to purchase homes in selected areas with nothing
down. Information is available to law enforcement officers
through their places of employment.
Programs - Some states, counties and cities offer
programs that can eliminate down payments. Often, prospective
home buyers must meet income requirements, hold certain jobs,
be a first-time buyer or agree to buy in a specific area.
It can take some sleuthing to find such programs. Start with
your state's housing agency. Your county or city also may
have a housing agency. With so many methods available to obtain
homes with little or no down payment, the goal of homeownership
should be achievable by almost everyone who desires it.