“Can I buy a home with no money down?” is a question that is flashed up on the screen during a number of current infomercials. These are the same infomercials with people discussing how they were down on their luck, but they now make six (or seven) figures a year through a very special real estate sales technique developed by a very special real estate guru. These extended ads go on to explain how it is possible to buy homes for no money down and it is possible to turn a very nice profit on the property. Whether or not all of the claims made in these infomercials are valid remains to be seen. However, it is possible for people who want to buy a home to do so without putting money down. This process usually requires a person to have excellent credit, so it is not something that everyone can benefit from.
The Upside and Downside of Buying a Home with No Money Down
Not having to put anything down on a home allows a person to hold onto money that can then be used for other investments or living expenses. Also, people who do not put money down generally enjoy maximum homeowner tax breaks. This is actually true for a person who is buying a house or for a person who is refinancing a loan on a current property. There are some negative aspects to purchasing a house without putting any money down. The two biggest problems for most people are high interest rates and private mortgage insurance (PMI). Generally, a person has to put at least 20 percent down on a home to avoid paying what can be a very high price for PMI.
More and More People Are Paying PMI
So what’s one of the main results of all these new no money down loans? Basically, more and more Americans are finding themselves dealing with the cost of PMI. Does this really outweigh the cons of paying a hefty down payment? For people who simply cannot afford a down payment of 20 percent or more, yet wish to fulfill the dream of home ownership, coping with PMI is a must. Effectively handling PMI payments and leveraging a new property into a suitable investment can be done with some sound advice. Finding the right no money down lender is the first step in the process.