Zero down loans, the bane of the housing crisis. It means that from Day One homeowners are underwater. If everything is wrapped into the loan including the down payment and closing costs, this will put the price of the home over the actual value and homeowners now owe more on their home than it’s worth.
First, consider that before jumping in….
Now that we have established that fact, let’s see if a zero down loan is really a good idea.
USDA – These are zero down home loans that might be a good option but only for eligible applicants of a certain income bracket and only for particular homes. Homes must meet certain guidelines so you are restricted.
VA – For military personnel only. It can be a great option especially since there are several military bases here on Oahu. Much of the loan costs are covered and closing costs may be covered by the seller. This is definitely the way to go if you or your spouse are in the military or have ever served. (More about VA Loans)
Assistance programs – Each state has their own programs for low to moderate income applicants for assistance in coming up with the down payment and/or closing costs. This might be an option if you qualify but you’ll need to talk to a qualified lender to find what’s available to you in your city.
Is it a good idea? It can be tough, especially if you are barely making rent now. You certainly don’t want to burden yourself with a loan plus home repairs but if you can comfortably make your rental payment each month and you’ve saved a little for additional costs, this might be a great plan BECAUSE….
…. Consider this – starting off with a USDA loan or other low down payment option may be a great way to break into the real estate market. Start off where you can, then sell in a couple years for a profit, pay off the existing mortgage and hopefully values will have increased enough to afford a better down payment on your next house.
If you start now, you may be in a bigger home or one you really love in just a couple years because you started now, planning, preparing and building equity in a property, even a condo.
Ready to get started or maybe just ask some more questions? Give us a call anytime!