Part One Of Two

Most real estate salespeople will tell you without hesitation that no-one can purchase real estate without a down-payment or credit check. They will tell you that a credit check is an essential part of the process and that you better have a fistful of cash before you ever think about buying a home. Of course, nothing could be further from the truth!

Everyday throughout America, tens of thousands of people are acquiring homes without being subjected to a credit check or spending a cent of their own money as a down payment.

The reason why real estate salespeople don’t even want to consider real estate transactions that are creatively packaged and don’t require cash is obvious! They receive their commissions only when there are cash transactions.

No one should deny a real estate salesperson commissions. In many cases it is their expertise in the real estate field that can help a person find great buys. They know the market in their areas and deserve the commissions they earn. However, in times of high interest rates when money is tight, many are increasingly willing to be creative by allowing their commissions to be paid via a note or by deferred payment. Still, there are even better ways if you want to avoid down payments and credit checks.

HOW A DREAM HOME CAN BE
PURCHASED WITHOUT A CREDIT CHECK

The Veterans Administration(VA) and the Federal Housing Administration (FHA), a division of Housing and Urban Development (HUD) have been encouraging and promoting home ownership through their agencies for years. When people are denied a home loan by a bank or other lending institution, FHA will insure a home mortgage loan by giving the lending institution a 100% guarantee against any losses that may be incurred if the buyer does not repay the loan. Another benefit of getting a FHA loan is that the interest rates are usually lower than the standard bank rates for home mortgages.

The VA will also guarantee a home loan up to 100%, which also allows a buyer to receive a home loan through a bank or other lender. A credit check is required on the “original” buyer of the home, but here’s the loophole!

While it is true that from March 1988 onward, all assumable VA loans require credit approval, the good news is that these changes in credit check approval only apply to those loans that were made “after March, 1988,” ALL VA LOANS MADE BEFORE MARCH 1988 ARE STILL ASSUMABLE BY ANYONE REGARDLESS OF THEIR CREDIT!

GEOGRAPHIC LOCATION - Scoring systems are adjusted for differences
in geographic locations,. For example, home ownership may not score high
in an area where there is a high incidence of credit problems, reoccurring
employee/employer differences, low income, etc.

EMPLOYMENT - The longer you have been on a job the better.

OCCUPATION - Occupations can be divided into many categories with
a high to low score within each category for different occupations.

AGE - Older is not considered better until you pass age 40. Under 25 to
the end of your 30’s receive the lowest scores. The rational is that people
under 25 haven’t proven they are a good credit risk. People in their 30’s are
still raising a family, buying a home, and tied down with enormous expenses.
This is also the time most people declare bankruptcy

INCOME - The higher your income the more points you will receive.

TELEPHONE - Having a telephone is an indication of stability. Give
yourself more points.

AGE OF AUTOMOBILE - No auto is a low score, but the newer the vehicle
the higher the score.

DEPENDENTS - One to three indicates responsibility and stability. After
three, points drop rapidly.

CITIZENSHIP STATUS - Non-citizens receive negative points.

BANK ACCOUNTS - You receive high points if you have a checking and
savings account.

CREDIT REFERENCES IN-HOUSE RECORDS - A good payment record
will earn you more points.

CREDIT CARDS - The more major credit cards you have the better.

BANK LOANS - A current bank loan will increase your score.

FINANCE COMPANY LOANS - You will receive negative points for each
finance company loan.

TWO POWERFUL STRATEGIES THAT CAN
GET YOUR APPLICATION APPROVED

Credit checks are requested by banks, lenders, and other creditors to see if there are negative items in your file. The more negative items you have, the less your chances of credit will be. As we have seen, creditors look for stability and reliability in an applicant. A steady source of income will receive a high score, but even more important than an income amount is a creditor’s belief and perception that you are both willing and able to pay back a debt.

In other words, even if you fail to pass certain criteria or formulas, your application can still be approved on another level that will get you the credit you want no matter what a scoring system profile says.

Motivated sellers are the best kind to deal with, because they will want to help themselves by helping you. Lack of money or credit shouldn’t be your primary concern when purchasing a home. Creative negotiating and positive thinking will get you what you want.

CREATE A DEAL THAT BENEFITS
BOTH YOU AN THE SELLER

Creative negotiating can lead to financing arrangements that benefit both the buyer and the seller. There must be a willingness, however, by both the buyer and seller to give and take, before the most favorable environment for a creative financing situation can be created. For example, if you want to purchase your dream home with nothing down, you might consider paying a little more.

On the other hand, if you are investing money out or your pocket on a down payment, then the sale price and terms should be favorable to you. A smart, yet flexible home buyer can often afford to pay a premium price provided it’s not too far out of line with the market value, and he can get attractive terms and no down payment.

FIND OUT WHAT THE SELLER WANTS

Many sellers want a steady income and don’t need front money in the form of a down payment. Most buyers never consider asking a seller what they want! If you can guarantee a nice monthly income to someone who prefers a steady check, you can have yourself a nothing-down deal. Find out what the seller really wants!

BUYING WITHOUT CASH MEANS
BECOMING A SUPER NEGOTIATOR

Sometimes you will require super negotiating skills if you decide to buy a home without using your own money. After you have found your dream home, you and the seller will have to sit down and negotiate a final agreement. The following three rules should be followed to enable you to get the best possible deal:

1) Get the selling price as low as possible.

2) Negotiate a very low down payment, or no down payment agreement.

3) Be aware of all the methods available to you in buying real estate
whereby you would pay some cash, or no cash up front.

The first five of the following options involve some cash up front, the remaining seven do not. At the top of the list the buyer buys out the sellers full equity. At the bottom of the list the buyer pays nothing down and doesn’t secure the debt. Somewhere in-between you should be able to agree on a compromise that benefits both parties involved.

Sadac Israel and IIM