Answer: Although
there really are options for buying homes with no down payment, there are very few options for people with no money for closing
costs or reserves (money left in the bank after the loan has closed). Zero down programs are considered "alternative
Financing" and often come with shorter commitments that require you to refinance in 2 -3 years and pre-payment
penalties that require you to stay in the loan for 2-3 years. Buyers have access to much better loans if they are able to
put 10%, 5%, or even 3% down.
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Another consideration is the market you're looking to
buy into. If the real estate market is a "sellers market" (high demand and low supply), like we currently have in Seattle,
it may be very difficult to buy with 100% financing as homes often sell for more than their appraised value. Investors
consider the true value of property to be the selling price or the appraised value, WHICHEVER IS LESS. If the appraised value
comes in 5% less than the selling price, the investor will require 5% down for 100% financing.
Need more information? Send us a quick note.
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