Buying A House With No Money Down. In 2009. Seriously.

alexandra Real Estate Leave a Comment

Sometimes, a deal just seems too good to be true. Like, the shamwow. If you’ve seen this guy on infomercials, you know what I’m talking about.

The current real estate market certainly has its share of deals from a pricing standpoint, but from a financing perspective, we may now be seeing the best deal yet. And the best part is, you don’t have to call a creepy guy at a 1-800 number to take advantage of it!

Ever since the first time home buyer tax credit was announced, folks have been speculating about the prospect of a complimentary program that would allow home buyers to apply the credit towards the purchase of their new home. A double whammy of stimulus money, if you will.
HUD (the Department of Housing and Urban Development, the federal agency whose partial mission is to increase home ownership) has just put an end to the speculation, and first time home buyers have the opportunity to reap some big rewards.
HUD’s new program allows the $8,000 first time home buyer tax credit to be used towards a home purchase, via a second mortgage. It works something like this:
A home buyer takes out a second mortgage for up to $8,000 to use as their 3.5% down payment. The second mortgage will be held by a government agency or an FHA approved non-profit. The buyer then pays off this second mortgage when they receive their IRS refund of $8000. This effectively puts the $8,000 credit to use immediately, rather than making buyers, sellers and the overall economy wait until the following year to see the fruits of its labor. This program is only being offered when the first mortgage is an FHA loan (conventional loans are not eligible).

So, what does this mean, practically speaking?

Basically, if you qualify for the first time home buyer tax credit , you can purchase a home priced as high as $228,000 with no money out of pocket. Not only that, but FHA loans also allow the seller to contribute up to 6% of the sales price toward closing costs/prepaids, meaning that you could potentially buy a home with no money out of pocket.
It’s a pretty phenomenal opportunity, especially considering how tight credit markets have been in the face of our current economic malaise. One more reason for first time home buyers to strongly consider the economics of investing in buying a new home, rather than putting more cash into the pocket of their landlord.
If you’re interested in finding out more about this program- in non-blog form- give me a call.
Big ups to Shannon Bagshaw at LoanSouth- who’s always keeping me and my fellow Sanctuarians up to date with the latest and greatest in the ever changing world of mortgage lending- for passing on this info.
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alexandra