No Money At Closing Home Purchases

Is it possible to purchase a home with no money down? Is it even advisable? With both questions the answer is yes. Sure, there are other factors which can impact such a deal, so please keep reading to find out if a no money down purchase could be right for you.

The home is being marketed for $215,000 and you are certain that you could offer the seller $203,000 and get the home. He may be insulted or have his feelings hurt, but after being on the market for 45 days he may simply cut his losses and move. On the other hand, you could offer the seller full price for his home with one caveat: he covers all of your closing costs. If he agrees, you shave some money off of the home's value in the form of closing costs paid by the seller.

To make things interesting, you locate a lender who agrees to finance your home 100%. Although this is unusual, your excellent credit history and great income shows the lender that you are his best customer. He agrees to finance the entire $215,000 purchase price and you move on having not spent a single penny to secure your new home.

Why would anyone want to purchase a home with no money down especially if they could afford to part with the cash? Well, for two reasons including:

Your money is already tied up in other investments.

You can afford the higher monthly payments and can use the higher amount as a tax deduction.

Even someone with little money but decent credit could be eligible for a no down payment mortgage. In this case, a mortgage lender could agree to the proposal especially if funds need to be diverted to making necessary repairs or for upgrades.

Naturally, not everyone agrees that this method is advisable, but a case by case study can only determine that point.

There are few other things to consider which may be required at closing which could take away the "no money at closing" feature:

Escrow for property tax or repayment of previously paid tax.

Homeowner's insurance if not paid directly to the insurance company.

Miscellaneous and incidental expenses.

Regardless, limiting your pay out of funds at closing is one option for you. How you swing the deal is up to you but mortgage lenders will be receptive to this idea if you have a stellar credit history.