Pittsfield, MA -- (SBWIRE) -- 12/16/2013 -- How to Purchase a Second Home with No Money Down
Many people are interested in purchasing a second home without having a down payment. One way to do it is to borrow more money than necessary when applying for a mortgage. Doing this provides enough money for the down payment, meaning they don’t have to use any out-of-pocket money. Keep in mind, though, that it will be necessary to purchase private home insurance. People who choose this route justify it by not having to put strain on their finances right away when purchasing the second home. Real-estate-yogi can help.
Piggyback Loans
Another idea to buy a second home with no money down is a piggyback loan. These are second loans on top of a mortgage which cover closing costs and down payment amounts. Many lenders offer these to those who cannot come up with a 20% down payment and who can’t purchase private mortgage insurance. Example: If a prospective buyer has just a 15% down payment, he may borrow 80% from a lender and finance 5% with a piggyback loan. Most piggyback loans come with slightly higher interest rates; be aware of this when considering one.
VA Loans
If a person looking to purchase a second home without putting money down on it is a veteran or current member of the U.S. Armed Forces, he can apply for the appropriate financing through the Veterans’ Administration. The interest rates for VA insured loans are often a bit lower than mainstream lenders’. To obtain such a mortgage, simply fill out an application with any VA-approved financier. It is necessary to have a Certificate of Eligibility from the VA in order to process the application, so be sure to have it at the ready when the time comes.
Other Options
Surprisingly enough, some cities, such as Boston, have lenders that will provide the entire amount necessary to buy a second home with no money down if one can prove he is reliant on public transportation. Such a person would not have to purchase private mortgage insurance. HUD also makes available a specific program for teachers and law enforcement officers which allows them to purchase a home for half price, thereby requiring a very small down payment. Contact city offices to find out if the city in which one is residing qualifies for this program.
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