Buy real estate with little or no money down
Q: We have a pretty good credit rating but not much cash. My father-in-law says there are ways to buy real estate with little or no money down. Is that just in the past, or is it still possible? — B.
A: Yes, there are still ways to buy your own home with almost no cash, especially for first-timers. Your good credit rating is a plus, and you'd need to show enough dependable income to handle monthly payments.
It helps if you're inquiring about an area with moderate home values.
Are you familiar with mortgage brokers? That's "mortgage brokers," not "mortgage bankers." They bring borrowers and lenders together, and they're an excellent source of local information. It won't cost anything to consult one.
For starters, the U.S. Department of Agriculture offers no-down-payment mortgages in rural areas. Some places that qualify are really just suburban. Sellers can pay your closing costs, and any additional fees can be added to the amount borrowed. The program is great for first-timers with moderate income.
Veterans Affairs loans, VAs, are available to those with two years' military service, or 90 days if still serving. They require no down payment and charge no mortgage insurance.
Federal Housing Administration loans usually require at least 3.5 percent down payment, but you are allowed to receive that as a gift, from parents or certain other sources.
The FHA Good Neighbor Next Door program allows public employees like teachers and police officers to finance with just $100 down. Placing a mortgage also involves closing costs, which can total several thousand dollars. Many mortgage plans allow the seller to contribute to those. You might want to stipulate that in a written purchase offer.
Some locations offer other government-backed programs for first-time buyers. Again, a mortgage broker will know if anything is available. For that matter, an experienced real estate agent should have information about local resources, and it won't cost anything to consult one.
Q: We are trying to refinance our second home. Does the bank have a right to put a lien on the house we are living in now or our other properties? — V.
A: I'm not a lawyer, but I can think of two ways a lender could put a lien (a financial claim) on your properties.
If you failed to repay a loan as promised, I believe the lender could go to court asking for a claim against some other of your assets.
That probably isn't what you're asking about. Beyond that, the only way the lender could file a lien on your own home, or on your other real estate, would be if you gave it written permission to do it — in return, usually, for a loan.
From your note, it's difficult to understand just what you're asking, but it looks as if you own several parcels of real estate.
If that's the case, you should already have your own lawyer and accountant on hand for advice. Contact Edith Lank at www.askedith.com, at edithlank@aol.com or at 240 Hemingway Drive, Rochester NY 14620.