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No Money Down Real Estate Myth

Updated on September 16, 2015
Mortgages require taxes and other fees which cost money.
Mortgages require taxes and other fees which cost money. | Source
It is possible to buy a house on contract terms as well as a mortgage.
It is possible to buy a house on contract terms as well as a mortgage. | Source
No matter if the dwelling is an apartment, house, condo or townhouse, it all costs.
No matter if the dwelling is an apartment, house, condo or townhouse, it all costs. | Source

Get it for nothing according to commercials. Infomercials bombard us with this message over and over again.

We have all seen the infomercials and heard the proclamations of the possibility anyone is able to purchase real estate with no money down. However, it is virtually impossible to to actually see this take place. It is conceivable to buy real estate using money which belongs to some else. Commercials which are more direct with all of the info touching on this idea simply would not be worth watching. There is so much more than getting something for nothing in these cases.

If someone is willing to lend an individual 100 percent of the purchase price of a piece of real estate or property, there are still expenses associated with the transaction. The monies are due for these odds and ends whenever anyone acquires a piece of property of any kind.

The extras even add up

Although some are including in each and every one, not all purchases are the same. There are a few which pertain to one while another never sees it. These are fees which include taxes and recording fees, insurance and taxes that must be paid to obtain the property. You may not personally be paying all of these charges, but someone will need to pay for these. The point is it does take some money to buy and sell any type of real estate.

A piece of truth

There is a nugget of truth to the no money down real estate idea. However, rumor started over twenty or thirty years ago. It was an idea whose time had come. Throughout the history of the nation, there have always been ideas to get it going. Remember the California land grab? It permitted millions of Americans to live the dream. Though at this time it doesn’t exist no matter what commercial icon attempts to convince the average listener.

The concept

The majorities of concepts lie in the idea a mortgage on a property has the possibility of being transferred “subject to” the mortgage or the note from one person to another. Which means the seller is capable of selling, the buyer is able to buy and the real estate or property transfers through a series of documents. All of this is performed without money exchanging hands. In addition the bank which actually owns the property at this time has no say in the matter. This is the idea behind the big score in real estate turn over income, property management and even becoming a landlord. The ultimate prize is the gigantic paycheck seen at the end of the deal.

Where things go wrong

In order to have a legal real estate contract persons must put something of value down as a form of collateral. The valuable item put up in exchange for the promise of payment is an insurance policy. Banks and other financial institutions are in the business of lending money based on the promise of repay, but over the years the practice of collateral has become widely accepted. The surety is equal to the monies or property to be fair. It is not fair is ask for 10 times more than what the property is worth, the same as asking for ten times less as well.

Nine times out of 10 the legal something you must put down is money when it comes to a real estate contract. You will be using money to tie down contracts and finalized any deals you have for real estate. Even one dollar will hold something down for you, but won’t finalize a contract.However, many of these deals are still under contract terms and financing will still need to be done quickly.

More than likely you will need to make some decisions about getting new properties based on how much cash it will take to purchase it. Many decisions about getting a piece of property are based on how much cash it will take to buy it. Buyers will not be eager to make purchases that will take too much of their cash to complete a transaction. This is also true for pre-foreclosed and foreclosed property.

You will need to come up with the money for a regular mortgage and all of those other fees missing quickly. You may be able to get around the mortgage if you find a buyer before your first contract term payment is due, but the chances of that happening are pretty slim. With our current economy times are very difficult to find buyers and mortgages.

You will need to use your own cash or someone else’s cash to make the real estate deal take place in the end. If you can convince someone else, an investor, to pay the feesand arrange financing without any down payments from you is the only way to get you myth to reality and purchase real estate with no money down.

Don’t hold your breath for any no money down real estate opportunities.

© 2011 smcopywrite


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    • smcopywrite profile image

      smcopywrite 6 years ago from all over the web


      thank you for the information and detailed advise on the no money down scams. unfortunately, i believe you are correct and when it will end is anyones guess. thank you for your insightful comment

    • pmccray profile image

      pmccray 6 years ago from Utah

      It's not virtually impossible to purchase property with no money down. As recently as 2002 going forward Countrywide Mortgage made a mint with the 80/20 loan. An 80% first with a 20% second closed at the same time.

      If your fico score was high enough no down payment needed and no verification of employment. It was call the "Fast and Easy" 100% or 80/20 purchase loan. Those of us in the business called it the "Fast and Sleazy".

      Evidently their still being advertised because either some private investors have gotten together promoting this garbage again or the big financial banks who went out of business because of this type of financing have re structured as another company playing the same game.

      I've even heard of title companies who are in on the game generate a deed for a 20% 2nd that magically disappears after the closing of the loan. So it's not impossible you just have to have the right fico score (probably 750 or higher) and assets to qualify. Somebody will always be out there to make the money.

    • profile image

      Sueswan 6 years ago

      Very interesting and informative.

      I believe that if something seems too good to be true it is.