The market is so beneficial for home buyers now everyone wants to learn how to buy real estate with no money down. And with the recent subprime lending scandal that contributed to several large financial institutions facing collapse, and in no small measure to the current financial crisis, you may think that your dream of real estate investing is gone forever.
That’s not true though, and there remain several viable options, allowing many first time homeowners to get into their own home, the first step on the real estate investing ladder, and making it possible for investors to access finance for investment properties.
Conventional finance takes into account your credit score, with the minimum threshold being in the region of 527 having been approved, as well as your debt to earnings ratio, and any equity or investments you may have to contribute, even your 401(k).
The thing to remember with conventional finance is that the better your credit score, the better the interest rate will be, since the financier will see you as a better risk option. The solution? Clean up your credit score before applying for conventional finance, or, because they don’t have a prepayment penalty, refinance once your credit score has improved.
80 / 20 Loans
An 80/20 loan option to finance your real estate investments is actually two mortgages, generally only available to property investors with a credit score of 620 or higher. The good news about this loan is that unlike conventional loans, no Private Mortgage Insurance, or PMI, is added to your monthly installments.
A little known funding method for real estate investments, there are actually over a thousand grant programs, available to most income groups. Doing a little digging, and finding out if your real estate investment dreams qualify for grant financing can save you a lot of money!
Low Money Down
Aside from these no money down routes to real estate investment, there is low money down options, or 3% down loans, usually available to people with credit scores above 620, although they are available through methods other than conventional loans that make it possible for most people to qualify. If you decide to choose the low money down option, the 3% payment could be a gift, or you could save for the down payment yourself.
Often, early stage real estate developments will sell lots for a minimal holding deposit. This lot becomes yours, with the balance of the agreed payment becoming due only months, or years, down the line. Property speculators have been known to make a lot of money buying these lots on release, and then selling them, at a tidy profit, before the full payment becomes due. The trick to this kind of real estate investing is to identify developments that will be popular, and where the demand will be high.
Real Estate Investing is For Everyone
Whatever your financial position and means, the dream of real estate investing is within reach. Speak to a financial advisor, realtor or mortgage specialist to find out what your best options for realizing your dreams.
Remember, the bottom line with real estate investing, whether you chose a no money down option or a low money down option, is that your money is being used to purchase an asset that will continue to gain value for the rest of your life.
Property is a perpetually popular investment choice, for ordinary people, as well as investment companies and the very wealthy for a reason – it’s safe, offers a tangible asset that is guaranteed to offer a return on your investment over time.