During my early years in real estate, if buyers could breathe, they could get a mortgage. That was before the market downturn in 2008. In fact, from 2003 to 2011 I had 3 transactions where buyers walked away from a closing with a large check in hand.
In those days there was a buyer’s down payment assistance program called NEHEMIAH. It would give the buyer about 3 percent in down payment funds and then charge back the seller along with a fee. NEHEMIAH funds do not exist today BUT if a buyer and a buyers agent worked their numbers, they could lower home-buying costs considerably.
With a reasonable offer on a house and not low balling the price, current buyer assistance programs, seller paid closing costs and property tax credits, you possibly could buy a house with just earnest money. That is usually about 1 percent of the sale price.
Here is an example;
DUE FROM BUYER
$54,500 – Selling price
$1,105 – Closing costs – Normally $3,466 but the buyer got some closing costs paid for by the seller
$55,605 – Due from the buyer
$ 500 – Earnest money
$53,657 – New loan amount
$ 1,635 – NEHEMIAH funds
$ 698 – Property tax credit
$56,489 – Total credits
$55,605 – $56,489 = <$884>
The buyer walked out of the closing with a $884 check in hand.
This was allowed before the market crash. Now you would be hard-pressed to find a lender who would allow this. Now they usually allow credits to the buyer for as much as they put into the transaction. So if the buyer gave $500 earnest money, the most they could receive back would be $500.
After the crash, lenders became very strict. Loans were much harder to get and buyer’s credit had to be above average.
Now it seems that lenders are loosening up. I just read an article where Waterstone Mortgage, a national lender based in Wisconsin and licensed to lend in 48 states, announced that it is now lending to borrowers who do not have a credit history. According to the company, it’s “Non-Traditional Credit Program” will use other payment history indicators like cell phone bills, rent, utilities, and insurance premiums when underwriting a borrower.
If you are ready to buy a house, talk to me and let see what kind of deal we can put together for you.