How do I buy Alpha Retta Homes for sale with no money down?

If you are looking for a no-money-down, 100 percent financed loan on an investment property, it is best to speak to your financing team.  Comparing the monthly payments and cash-flow potential of the proposed property is imperative before even contemplating placing an offer.  Generally speaking, it is difficult to find the properties in some areas that will allow for positive cash flow with no money down, and your team can help determine if this will be the case.  Keep in mind that investment properties pose greater risks for banks.  Applying for a no-money-down loan further exposes the lender to risk.  The lender is often willing to take the risk on qualified buyers but will do so only after passing that risk onto the borrower via higher interest rates and fees.  So be prepared.  Typically you must have good credit scores and cash reserves to qualify for these loans.

Mortgages lenders will offer several options for the no-money-down loan investor.  These may include some of the following:

• The 100 percent loan.  This is one loan for the entire sale price.  This will have a higher interest rate than the prevailing rate.  In most cases the resulting mortgage payment will be so high that the owner cannot use the rents on units to turn a profit.  This option also may or may not have private mortgage insurance (PMI).  PMI is a requirement from most lenders in a case where you put less than 20 percent down.  Typically loans with less than 20 percent down have higher default rates.  The lender arranges for a PMI company to share the risk and charges you a monthly fee for this insurance.  In the case of 100 percent financing, the PMI company helps take on this risk until the loan is paid down to the 80 percent mark.  This could result in a deterrent to the overall purchase, as the PMI will add more to your monthly payment obligation.
• A 90/10 loan.  This is really two loans, one for 90 percent of the purchase price and the other for the remaining 10 percent.  The interest rates on both these loans typically are higher than the prevailing interest rate, and there is a good chance that it may involve PMI due to the fact that the primary loan is at 90 percent of value and you have less than 20 percent down.  The mortgage payment again is usually too high for the investor to turn a profit.
• The 80/20 loan.  These are two loans that result in 100 percent financing with no PMI.  Since the primary loan is at 80 percent of the total sale price, the need for PMI is removed.  This is a much better option.  Both loans usually have higher interest rates than the prevailing rate.  However; the interest for an 80/20 loan will be lower than a 90/10 or 100 percent loan.  Structuring payment this way will allow for many investment properties to have some cash flow and thus warrant an offer for purchase.  Again, since cash flow is the goal, a discussion with your lender will guide you to the best program.
• Leveraging.  This uses the equity from one property to finance the purchase of another property.  If your investment cash is not readily available, look at the equity in your primary owner-occupied home.  If there is enough equity in your home to cover the purchase price of the investment property, you can draw on a home-equity line of credit.  Using money from the equity line, you can pay the down payment the lender recommends.  The bank through which you have the home-equity loan will then finance the remaining cost of the investment property.  Thus the property is 100 percent financed with no money out of pocket.

Since you have no money down on the investment property, the bank will offer you a lower rate on the loan.  Since you’re drawing the down payment from the equity loan, and it is on your primary home, the rate for that loan will also be lower.  The net result is you will have created a beneficial position for cash flow by having the lowest rates and best programs available.  The rents on the investment property will have a better chance to show profit.

The final consideration is to work in a seller contribution for closing costs when you place your offer.  With most lenders the maximum is 2 percent of the sale price on an investment property purchase.  With the addition of these monies, you may end up closing with absolutely nothing out of pocket.