Will there still be low down payment mortgage options made available to prospective homeowners as we move into 2014?
The U.S. may be entering into a new era of golden years. We have already seen solid price increases, steady home value appreciation and underlying fundamentals gradually pull themselves up to support a bright outlook. Still, unfortunately, access to mortgage credit has been the one factor holding many back. The ability to come up with a large down payment continues to plague prospective buyers.
The good news, according to CNN Money in November 2013, was that several large banks had returned to offering 5% down payment mortgages. This reportedly includes Wells Fargo, Bank of America and TD Bank. In some cases, buyers may be able to put down just 3% of their own verified and seasoned funds.
A USDA home loan, which is viewed by many as the ultimate low down payment loan, can offer 100% financing. Not all properties and all areas are eligible, but for those that are, this could be one of the most attractive home loan options.
Alternatively, seller or owner financing can open up more low down payment options. This can also extend to include lease options and rent to own for those eager to seize on today’s opportunities.
These private financing solutions can be attractive. While some owners continue to demand sizable upfront lump sums, others have relaxed. Though there can be great value for both real estate investors and regular home buyers here, trust continues to be one of the biggest challenges. With word of so many real estate scams, especially among platforms like Craigslist, those which are the best fit frequently pass on them for fear of being taken advantage of.
Real estate investors that don’t plan on holding properties for long have many other options available to them. This can range from sizable short term loans to lock up properties to interim financing while improving a property.
Hard money lenders have been a staple in this arena for decades, yet have lost a lot of their attraction due to cut backs in programs during the down turn. They may be attempting to claw their way back, but this isn’t always an easy prospect.
Transactional lenders have stepped into this void to provide more of what real estate investors want, but they aren’t the only source to be tapped.
