Your timing could not be more perfect. Well, actually, last year would have been better.
With the information you have shared, it is reasonably clear you need alternatives to building wealth.
Looking towards a real estate investment is the most practical and obvious solution at this time.
You would be well served to consult a financial planner to establish a long term plan that includes a real estate element.
Let me be honest with you, if your finances are so tight you can not save the money for a down payment, you may be setting yourself up or future disappointment.
Be aware, wealth building through real estate may require buying what you can afford, before you can buy what you have always dreamed.
Get real guidance from real people, you know, those you can call and meet.
Set up a strategy, and implement the plan.
You ARE on the right thought.
Best of success to you,
Annette Lawrence, Broker/Associate
Remax Realtec Group, Palm Harbor, FL
Scotsdsale Bluffs Tour:
New FHA borrows will need to have a credit score of at least 580 to qualify for the low down payment loan. If your FICO score is less than 580, you are not disqualified for a loan, but you will be required to put a minimum of 10% down.
Because you would be putting less than 20% down, you will be required to pay mortgage insurance. FHA has an upfront fee of 1.75% which is wrapped into your loan and a monthly fee of 1.30 % if the original loan amount to value is less than 95% and 1.35% if you put less than 5% down.
Typically, once you reach a 20% equity position, the PMI is removed. Not so with the new FHA loan changes. The insurance stays on your loan for the life of the loan.
For example, if you are paying $112.50 (borrowing $100,000) per month in mortgage insurance and you pay the mortgage for the full 30 years, you will have paid $40,500 for insurance that benefits the lender.
Make sure you weigh the long-term costs to the short term benefits before you go get a loan.
First, FHA mortgages only require 3.5% down. Other programs have low or no down payments--VA, for instance, is zero down. It's possible your town, county, or state also has some special programs.
Second, a growing number of owners are selling with owner financing. That's totally negotiable, but unlikely to be in the 20% range. Often, it's more like 5%-10%.
Third, there are other ways to purchase--lease-options, land contracts, contracts for deed, equity sharing, and more. Those are all negotiable, too. But most likely you'd be looking at maybe 2%-5% out of pocket. I've done lease-options with no out-of-pocket costs.
So, check with a good lender and a good Realtor to find out what your options are. The third category, above, will require an especially creative Realtor. But they're out there if you look hard enough.
Hope that helps.
Best of luck.
Tierra Antigua Realty
P.S. If you need the name of a Realtor in your area, give me a shout.