Financing in 02343>Question Details

Susan Donahue, Home Buyer in Holbrook, MA

Are today's No-Money-Down offers scams?

Asked by Susan Donahue, Holbrook, MA Wed Mar 5, 2008

We bought a house in Providence 5 years ago that we aren't likely to be able to sell for what it's legitimately worth right now. I got a job in Boston, so we moved to the South Shore and are renting a much-too-small house in a community we really like. Unfortunately, our net worth is tied up in the Providence house we can't sell, so we don't currently have a down deposit to purchase. There's a house a few blocks over that has potential and is for sale - it's bank-owned and has popped up on a website that claims it can sell this house for no money down. We're not jumping on it - we still have months left on our rental lease, but I'm wondering if in today's market, any no-money-down program is really a good idea. Our credit is good and I'm a lawyer - not real estate, but I can read the fine print no problem - but I don't even want to get my hopes up if it's not worth the effort. Thanks so much for any insight you can offer!

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The Mortgage Industry has been turned upside down in the past year. "no money down" is very vague. You are better off working with a reputable lender that can qualify you based on your INDIVIDUAL qualifications. Credit, Assets, Income, and Debt Ratios.... Remember the lending requirements are changing DAILY and the program that you may qualify for today could be gone tomorro...so please work with a reputable lender and one you are comfortable with the terms and conditions, then enter into negotiations for a specific property.Not before.. Best of Luck
0 votes Thank Flag Link Tue Mar 11, 2008
I hate to argue, but I must point out that you don't have to have good credit to purchase a home with no money down.
Susan, you may want to ask your lender to check into an FHA loan for you. As long as your past 12 months credit history is clean, you haven't had a foreclosure in two years, and your debt to income ratio is okay, you could very likely be approved.
There is a requirement for 3% down payment, but many Realtors can negotiate the contract so that the seller pays that down payment on behalf of the buyer. In todays market, many sellers are willing to do that in order to get the home sold.
Good luck in Holbrook!
0 votes Thank Flag Link Sun Mar 9, 2008
Do not worry. Yes it can be done. Go for it, but do not sign anything before I look at it.
Also, if you have good credit call or write me with you tell show you how to buy it without needing the no money down, which most of the time are taking advantage of the buyers.
0 votes Thank Flag Link Sun Mar 9, 2008
100% Options are getting tougher every day. You have 2 major hurdles 1 is the declining markets and the 2nd and most difficult is the MI companies are no longer insuring 100% LTV's. the options that are available today could be eliminated tomorrow. I wouldn't count on 100% financing.
0 votes Thank Flag Link Wed Mar 5, 2008
100% financing is completely real. Almost all of my clients go this route. If you are renting out the home you own, that rental income could possibly reduce your debt/income ratio enough to qualify. It couldn't hurt to sit down with a reputable lender and see what he/she can do for you.
0 votes Thank Flag Link Wed Mar 5, 2008
Hi Susan,

The no money down loans or 100% financing loans are not a scam. I have and currently work with buyers who go this route. The only thing that has changed is that lenders are red-flagging areas that they call “softening markets” and depending on the community you buy in, there may be a 5% deposit required, and in this case 100% financing would not be an option. One thing that buyers don’t think of when using 100% financing is that although the lender may not require a deposit, the seller will require a good faith deposit. You would come out of pocket with this for a short time and have written in the agreement that all deposits are to be returned to the buyer at closing.
0 votes Thank Flag Link Wed Mar 5, 2008
Hi Susan,
My hunch is that most of those websites claiming "no-money-down" offers are indeed a scam. But I do perform appraisals for several of my legitimate lender clients that offer 100% financing. It is rare these days, but not unheard of. I just did an appraisal this week for a highly recommended client of mine, Seth Cohen of Heritage Home Funding (link below), that was 100% financing. Your situation may warrant a conversation with Seth. At the very least he will have an honest, straight-forward conversation with you about your options. He's the expert on the subject, not me, but I know it does exist and 100% financing is definitely an option for buyers in similar situations to yours. If you drop him a line, please tell him I sent you. Good luck, and DO keep your hopes up, it may very well be worth the effort.

Take care,
Mike
0 votes Thank Flag Link Wed Mar 5, 2008
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