You may be planning on buying real estate in the next few months or even the next few years. This property could be your primary residence, or you may wish to own an investment property such as a rental. Real estate can be a great investment, but it does come with an expensive up-front payment. However, there are a few ways you could potentially buy a property with little or no money down.
Here are some unique ways you can buy real estate with little or no money down.
Take Over An Existing Mortgage
One unique way of buying real estate with little or no money down is to take over a seller's existing mortgage. This is also known as a 'subject to' contract. A potential buyer takes over the seller's mortgage and pays the seller the equity already paid into the house. This works great if the seller already has a low-interest rate mortgage.
You will have to do a lot of research into this option. Not all lenders allow for a buyer to take over an existing mortgage, and you could potentially have to negotiate your own mortgage with a lender.
Other mortgage lenders have a clause in which the entire mortgage must be paid off on the sale of the house as well. It can pay off to research whether or not you are able to take over the existing mortgage as it can save money in the long run.
Lease To Own A Home
You may have seen large developers offer lease-to-own homes in your area. This is a popular way of buying a home with little or no money down on it. A lease-to-own home means you technically are renting or leasing the home for the first several years. This rental payment goes toward your down payment on the home. Once the downpayment is paid for, the payments are now made through a mortgage and the home is no longer a leased home.
You could negotiate with a potential seller to also do a lease-to-own type arrangement. This will work best if the home is already a rental property and the owner wishes to sell the property. They may be willing to work with you on a lease arrangement until the down payment is paid off, usually within a specific timeframe.
Use Seller Financing
Another unique way to buy real estate with little or no money down is to use seller financing. The seller may agree to pay the buyer's down payment to their mortgage lender to help the property sell faster. They may accept a slightly higher purchase price on the house to forgo the down payment. You could also negotiate to pay the down payment in installments.
You could also offer to pay off some of the seller's debts in relation to the house such a renovation costs instead of paying the down payment. This could end up being less than if you paid the down payment itself.
Contact a local real estate agent to learn more about your options.