Ways To Buy A Home With No Down Payment

For first time home buyers, getting a mortgage loan and saving for a down payment can be daunting. Many struggle to get approved, feel like they will never reach their savings goal, or cannot afford to pay off the loan they get approved for. There are many options like low or zero down loans, as well as more unique options like crowdfunding or cash back savings while shopping. All of these options have pros and cons to be considered before pursuing one.

Zero Down

The obvious pros to a low or zero down payment loan are that you can get the loan sooner and the savings can be spent on other things like improvements and expenses(NerdWallet). However, there are cons. With a low down payment, you may get a higher interest rate because you are seen as a higher risk. In a lender’s eyes, you are more likely to not be able to make a payment than someone who could afford to make a larger down payment. Low or no down payments also mean lower equity in your home. With low equity, a drop in the real estate market could mean that if you want to sell, your profit may not pay off or break even with what you still owe on the mortgage(NerdWallet).

Crowdfunding

A unique alternative to saving is HomeFundIt, which has both a Cash Back Program and a Crowdfunding Program to help newlyweds, young families, or anyone who might need a little help saving for their home! The Cash Back Program gives users up to 20% back on purchases at select retailers, and stores it in a secure savings account. Their other program allows users to set up a Crowdfund where friends and family can donate to help meet their savings goal. They can choose to make their donation conditional, so if the goal isn’t met, the money is returned to them, or non-conditional, where the user keeps the money either way.

Rent-To-Own

This is typically seen as a low risk way to buy a home but in fact, it is very risky. To sign a lease with a landlord that is both your landlord and a seller is too complicated. If you have low credit or are looking to build equity in order to eventually get a mortgage, renting-to-own is a slow way to do so since you don’t gain equity while renting(TheBalance). You also risk losing all of the down payment monies that you have already given to your landlord/seller. The benefit is that you get to try the house out before you own it. If you are interested in renting-to-own, you should consult a real estate lawyer because they will be able to advise you on the risks and benefits of your specific transaction.

Buyer's Agents: Why Do You Need One?

Automation and technological advancements in business are changing the way we do things. Grocery stores provide online ordering and curbside pickup, doctor’s offices use online portals to communicate with patients about tests, medications, and medical questions, and in real estate, you can view homes, communicate with agents, and buy a home while relaxing in the comfort of your own home. Since technology has simplified real estate so much, why should you still hire a buyer’s agent?

Knowledge

When you hire a buyer’s agent, you are hiring someone who has experience, has taken time to understand the legalities, logistics, and processes that are crucial in completing a real estate transaction with minimal risk and loss. Sites like Zillow and Realtor.com use algorithms to aggregate information from across the web. However, Zillow’s “Zestimate” tool can yield an inaccurate number. This can cause missed opportunities for sellers. Buyers will simply pass by the house if it is priced too high.

Resources

When you hire a buyer’s agent, you gain access to the tools, resources, and experience that they have. Realtors in Maine use the Maine Listings System(MLS) which allows for them to search for homes based on specific criteria like price range, location, number of bedrooms, acreage, waterfront, and more. This system provides them with years of data on sold properties so that they can provide you with advice related to market value. They also have access to in depth information about the property that the seller provides so you can uncover possible issues.

Expertise

Lastly, a buyer’s agent is a fiduciary that provides you with protection and support throughout the transaction. Real estate transactions are complex processes that require attention to detail and an understanding of real estate law, building science, and financing. By hiring a buyer’s agent, you can focus on making the decision, rather than due diligence. 
As your agent, they will be there to explain the process at each step and give you advice when you need it. As licensed Realtors, they have experience with negotiating and getting you the best price possible.

At Gray Fox Real Estate, we have compiled the services we feel are absolutely critical for our clients to have as buyers. A full list of our Buyer Services can be found here on our website.

Considering selling? See our full list of Seller Services here.

Moments in Buying And Selling That You Need To Trust Your Agent

It's so important when it comes to buying or selling to find an agent that you trust. This is your home. This is your investment. Real Estate is more than just a transaction, it involves your emotions. The memories that were made in your old home and the aspirations that you have for your new home are all part of the process and should be considered. However, sometimes emotions can make it difficult to make the best possible choice. That's why having an agent you trust will help you make the best decision possible when it comes to buying or selling!

Home valuation

When it comes to selling your home, hearing that the value is lower than you expected can be hard. Market conditions and historical data can provide Realtors with information to provide you with an estimated value based on comparable properties, called a Comparable Market Analysis. Polly Cockrill, Gray Fox Real Estate’s Designated Broker and Owner, can explain why it is so important that you trust your agent when it comes to valuing your home.

“I try to use similar methods to valuation that an appraiser would use to price a property to avoid problems for my clients. I spend quite a bit of time providing a Comparable Market Analysis. I collect data of homes that are similar in size, age, and location. For rural properties, this can be a challenge because there are generally fewer comparables. I also take into consideration the cost of construction on newer homes or homes that need total rehab. Often, I find discrepancies between what a home will sell for and the value of the home after considering the costs to rehab. There is an increasing disparity between the cost of construction approach to value, and market value.. Market value is defined as what a Buyer is willing to pay.”

Negotiation

No one wants to pay too much for a property, especially when it’s an investment as large as buying real estate. Negotiating can be difficult because you don't want to make an offer that’s too high and spend more than you need to, but you also don't want to offer too little, and get outbid by another buyer. This is where your agent's knowledge and experience comes into play. They have the skills that are needed. They know how to negotiate. Your agent will advice you and make their recommendations on what to offer, but you must be the one to decide what you feel comfortable with.

“The market conditions seem to be stable as of February 2019 but are leveling out. The value of homes seem to be staying the same. I am seeing more foreclosures and short sales. I anticipate we will be able to declare that we have a Buyer’s Market in 2020 or 2021.”

— Polly Cockrill, Designated Broker, Gray Fox Real Estate

Repairs/improvements

You know your home, but your agent wants to position your home to obtain the best price. What may have worked for you and your family might not be what works for potential buyers.

Do you have a spare room that has become a landing place for miscellaneous items? Tidy it up, get rid of clutter, and add a purpose to the space. According to Houzz, "Each room should have a clearly defined purpose" when preparing your home for selling. You want to make the home camera-ready, and make it seem like no one lives. This is always a difficult task for everyone!

Always be sure to ask your agent to explain anything that you need more clarification on. Be sure to ask for data and proof that supports their advice. This is your home, your money and you deserve to understand what is going on during your transaction! If you think something sounds off, ask about it. A trustworthy agent will provide you with evidence to assure you that you are making smart decisions.

At Gray Fox Real Estate, due diligence is a service we provide all clients. Below, we explain why we focus on due diligence and why you should value it in your real estate agent.

At Gray Fox Real Estate, we provide comprehensive due diligence services to our clients. This means that we work hard to discover all material defects and facts that may affect the value of the property. In Maine, the burden of risk analysis falls on the Buyers due to “caveat emptor” or “Let the buyer beware.” Therefore, excellent due diligence services in a real estate transaction are crucially important. Our staff is trained to use a proprietary due diligence system. This is an extensive and time-consuming process, but well-worth the results. Our clients can be confident when making one of the largest financial decisions of their lives.

Maine hoMEworks!

This is a great place to get information on buying a home. The information is not part of a marketing promotion by a lender or real estate company.

Below is a link to the Maine hoMEworks Program. The 2017 schedule of classes has a number of classes taught by counselors that have been approved by the Maine State Housing Authority.

The fee is nominal and classes are offered online and throughout Maine. Click the button below to be brought to their site.