From: Gordon Reeder 
Newsgroups: misc.invest.real-estate
Subject: Re: Is it Possible to Buy Real Estate With No Money Down?
Date: Mon, 29 Nov 2004 06:30:38 -0000

"Dan Farrow"  wrote in
news:41aa4a81$0$9385$45beb828@newscene.com: 

> I have seen many ads selling this or that book or course of study for
> buying (and subsequently selling) real estate with no money down.  All
> of these schemes smell like "Get Rich Quick".  Would someone (not a
> someone selling a home study course or a book) care to comment on
> this?  If it is indeed possible to buy real estate with no money down,
> how does one begin to sort through the snakeoil salesmen?
> 
> Dan 
> 
> 

It's not that hard to sort through the "snake oil" salesmen.
Step 1: Gather them all together into a heap.
Step 2: Toss the whole heap into the trash.

As for no money down.  Many years ago this used to be magic.
Most lenders wouldn't loan you more than 90% of value of a 
house.  So the Zero downers tought a couple of approches.

1) Get your parents to lend or give you the 10% down payment.
But: Today a lender will ask you to disclose any such funds.
It could affect your ability to qualify for the loan.

2) Get the Seller to hold back a 2nd mortgage for the 10%
down.  This still can be done today.  But: try to find a 
seller who will do this.

3) Purchase a house for less than it's worth.  Have it 
appraised for more than it's asking price.  Apply for a
mortgage based on it's appraised value.
But:  It won't work today.  Most (AFAIK all) lenders will
lend based on either the selling price or the appraised
value, which ever is lower.

4) Offer to buy the house for 10% more than the seller is 
asking.  Require the seller to kick back or write off 10% 
after closing.  The bank then lends 90% of the inflated
price.  BUT: if the house can't appraise for 110% of asking
price you can't get the loan. And see the gotcha for #3 above.

It's not that hard to buy for zero down these days.  Many 
lenders have 80/20 loan programs where you get two loans;
a first mortgage for 80% of the price and a 2nd for 20%.

Of course none of the above mentions closing costs and 
prepaids, whiich can add up to several thousands of dollars.
These are also handled in a simular manner as laid out above.

-- 
Just my $0.02 worth.  Hope it helps
Gordon Reeder
greeder
at: myself.com

Hey Dubya!
Unity means let's try to meet each other halfway