The ads for zero move-in are usually from investors who already own the home and are trying to get someone in it. They've bought the home, have no one in it usually, and are trying to get it sold, so they use that tactic as advertising to get someone in their home. It gets them out from under the payment that they may need out from under for a variety of reasons. Sometimes builders run specials like this too for a variety of reasons to stimulate interest.
Loans with FHA require you have some "skin in the game" and will allow you to get back at closing any monies you have put down on the home except for $500. There are also some down payment assistance programs that you can get in conjunction, if you qualify, with an FHA loan that will pay for the mandatory 3% down payment with FHA.
Now, if you needed to turn around and sell the place in a year and you put nothing down, that could be a downer. But, in your situation, being a Dr., it's unlikely that you're going to get transferred or anything like that. You will probably pick an area to practice in I would guess and stay there to build your practice and likewise stay in the home until it no longer suits your needs/lifestyle.
Another con is that if you have a loan for 80/20 or 80/15/5 or some combination thereof, you will have PMI - private mortgage insurance. PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI. Your loan officer will give you a good faith estimate and let you know what your PMI cost would be on a monthly basis. If you plan on staying in one place for a long time (10+ years), you may pay down your PMI to a point that you won't have it anymore. You just multiply your purchase price of the home you are considering x 1.25 and it will give you the minimum value of your property required to cancel PMI (for example $250,000 x 1.25 = $312,500.) Looking at the interest rates today on borrowing for a new home vs. interest rates on what you can get for your investment dollar - it makes more sense to take on the PMI. The vast majority of 1st time homebuyers do not put 20% down these days.
Hope this helps,
There are also a lot of programs from the government to help out. Just find a good lender to help you find them if you qualify.
Actually, zero move in is the best approach to buying a home especially if you are a first time buyer. With mortgage rates as low as they are, it does not make economic sense to put any money down on a house...unless absolutely required by the lender...because the effect on your monthly payment is minor. For example...with rates in the 6% range, each $1,000 of down payment will only reduce your monthly payment by about $7.00...that's it. It is better to keep you cash.
Again, some mortgage programs like FHA require a 2.25% net investment in the property. But a seller can contribute up to 6% of the sales price towards the Buyer closing costs...reducing the Buyers cash requirements.
There are buyer assistance programs that can provide for the down payment and this together with a Seller contribution...if structured correctly - and this is where an experienced Realtor is important...you can basically walk through the door with zero cash out of pocket.
The con is that you're actually using your equity position in the property to cover these costs and you would not be able to sell the property for a couple of years without being in the negative. But if you are planning on staying with the home for a while, I highly recommend this strategy. It is one that I work towards with all of my Buyer clients.
Please feel free to call or email if I can help you in any way.
Alan Wynn - Realtor
Like NO ONE Else!