|
Why you should consider buying a
home with little or no down
payment
Tax
Deductions - Under current tax laws, you can deduct 100
percent of your mortgage interest from your taxable income. For most
people, the interest from their home loan is one of the only tax
deductions available. The more you borrow, the more interest you can
deduct.
Return on Investment - For many people, their
home is the best investment they will make. If your home appreciates in
value, you can increase your return on investment by putting less money
into a down payment. For example, if you put down $20,000 as a down
payment and your home appreciates $10,000, you receive a 50 percent return
on the money you invested on the down payment. If you only put down
$10,000 as a down payment and the house appreciates by $10,000, you would
receive a 100 percent return on your investment. If you buy a house
without a down payment and the house appreciates in value, you can have an
unlimited return on investment.
Invest Down
Payment Money Elsewhere - Instead of tying up your money in a
house purchase, invest that money where it will provide a return that is
higher than the interest rate you are paying on your mortgage. I suggest
purchasing rental real estate. As mentioned earlier, real estate offers an
opportunity to get a higher-than-average rate of return on your
investment. You can hire a property management company to oversee the
property if you don't want to deal with tenants. Another option is to buy
a vacation home. With a vacation home you can rent it, use it yourself, or
do a combination of both.
If you
don't have the money for a down payment, that's OK. In fact, it's one of
the best reasons to buy now! If you wait, you run the risk of paying more
for a home because the costs of housing almost always go up faster than
you can save money. Interest rates may also rise, which will result in a
higher cost to you. As a rule of thumb, waiting almost always ends up
costing a buyer more. So consider buying today without a down
payment.
|
|
How to Buy a Home Without a Down
Payment
VA Financing - Veterans of the active duty
military are eligible for VA financing, which allows you to buy without a
down payment. In addition, VA financing also lets the seller pay for the
closing costs.
Qualifying for a No Down
Payment Loan - An increasing number of lenders are now
offering home loans that do not require a down payment to those who
qualify. To qualify, you generally need to have an excellent credit
history. Your real estate agent can direct you to a mortgage broker who
offers these types of loans.
Grants - Some non-profit organizations offer
non-repayable grants to home buyers who want to use the money as a down
payment to buy a house. These grants generally involve a motivated seller
who agrees to contribute some of the closing money to the non-profit
organization. In addition, the amount of the loan cannot exceed a maximum
amount, which changes periodically. Your agent can provide you with more
information on how to qualify for these grants.
|
