You want to buy a home, but you have very little money saved. What are your options? ™ Traditional mortgages don't always require large down payments. If you have a good income, stable job and good credit, you should easily be able to get a traditional mortgage, even without a down payment. However, if your credit is bad, there are still plenty of options for getting into the real estate market. Despite the mortgage-due-on-sale clause, sometimes a buyer can take over payments on an existing mortgage. It is very unlikely a bank will demand the full mortgage, and risk ending up having to deal with a foreclosure, if monthly payments are being made on time. These sales, called "subject to" sales. In these cases, the seller will require a second mortgage to get their equity out of the home. If there is little or no equity in the home, a contract can be arranged wherein the buyer agrees to pay off the sellers mortgage in a set number of years when they in turn sell the home. Often, this deal is made with the promise of a percentage of the buyers profit going to the seller when the home is cash for homes sold again. These contracts allow a highly motivated seller to walk away from their mortgage and either easily get a second mortgage, or start fresh, but receive a check in an agreed upon number of years for a percentage of the homes re-sale. As a buyer, you can assume the mortgage, either live in the home or rent it out, then when it has gained equity, sell it and only then give the person you bought it from a small sum. While subject-to sales sound complicated, they can really be a great deal for both buyers and sellers with little money. Those with disposable cash can buy foreclosed homes for sale at attractive prices while the real estate market has yet to recover from the crash of recent years. Less financially savvy people would not be able to borrow that easily these days given the more stringent loan terms-the result of the wanton lending that fueled the housing bubble since 2003. The home prices in some areas in the country have yet to hit the bottom and the market may stay depressed for quite some time, especially for those areas that are hit with high unemployment rate. As noted by The Wall Street Journal, some with disposable incomes have let go some of their illiquid assets like art and cars to invest on properties, especially foreclosed homes for sale, that are being offered at irresistible prices. Some of those who are capable of paying cash can afford to haggle for a good price. A lot of sellers-be it the lender that foreclosed the properties or the original owner-would prefer cash buyers because there is less risk. They do not have to worry about the buyer losing jobs or defaulting on mortgage. Besides, sellers want to liquidate their nonperforming asset as quickly as possible. In economic downturns, cash is king. Investing wisely As the mantra of financial geniuses goes, buy low, sell high. Those that can afford to do so should grab the opportunity now to buy foreclosed homes for sale to get the best deals. They cannot go wrong in this kind of housing market that does not have anywhere to go but up. The key here is holding on to the investment long enough for its value to increase and sell it for a tidy profit later. In a bad economy where everybody is losing his job, it is good to wait out a bit. The intelligent investor can afford to let his money sleep for a while since he did not need returns right away. In the first place the funds he used was disposable anyway. Some of them, like Donald Trump in his early days as a real estate mogul, bought foreclosed homes for sale like apartment complexes and rented them out to have a steady flow of income. The revenue may be small but it was enough that his money was working for him. Later on when the timing was right, he was able to sell the properties by more than half of what he paid for.
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