By Jeanette Joy Fisher
In the 1980s, Robert Allen hit the big time with a bestseller called Nothing Down, a real estate investment book telling people how to buy properties for little or no up front investment. It was a landmark book, offering dozens of ideas on what was called "creative financing," and thousands of people made millions of dollars using Allen's techniques. But are Allen's ideas still viable in today's marketplace?
The good news is that most of Allen's methods still work. The better news is that many of his creative financing techniques have become standard practice for mainstream lenders. In fact, lenders have embraced a number of Allen's ideas since Nothing Down originally hit the bookshelves and use them to help buyers get into homes with no money down--even buyers with less-than-sterling credit.
The National Association of Realtors reported that in 2005 more than 30 percent of all home sales in the United States involved some form of 100 percent financing! Nothing down loans are especially popular among first-time homebuyers (which is generally defined as someone who hasn't owned either a condominium or single-family home in the past two years).
Now the not-so-good news before you get TOO excited. Mortgage lenders are getting more savvy all the time, so they're getting good at recognizing qualified candidates for zero-down loans. You'll generally need a verifiable source of reliable income, and a good credit score. However, even that is changing, because some lenders have begun to offer "stated income" mortgages that allow you simply to state your income without having to provide income tax forms or other proof of income--assuming you have good credit.
More not-so-good news: When you finance all your closing costs, it means you'll be borrowing more money, which translates to higher monthly payments. Some lenders will loan you up to 125 percent of the home's purchase price, to cover closing costs and necessary repairs or upgrades; but you'll pay for that extra money handsomely over the course of your mortgage, and sometimes at a higher interest rate, so check the details carefully before you sign the papers.
In short, it's much easier to buy a home for nothing down than it was when Robert Allen first published Nothing Down. The trick is to get into your home with nothing down and be able to make the payments over the long haul.
Copyright © 2006 Jeanette J. Fisher
Jeanette Fisher offers a free ebook on Flipping Houses