Buying a house with no money down??

Question

Hi everyone, my parent's house is about to go into foreclosure because they have trouble making payments, now i want to help them somehow that would benefit the both of us. What are my chances and are their loans out there that would allow me to purchase my parent's house with very little down payment or even no down payment?

This way, my parent's can keep the house ajd i could start my investing career in a year by refinancing the loan. I appreciate the time!

JD Martin · Answer

@Alexander Felice is right on the money. If you can afford to hold a note and make the payments yourself, why not just give them a hand when they are short and find your own place to invest?

IE: Your parents right now have a $1000 mortgage that they can't/won't pay. They've not paid long enough that the house is about to go into foreclosure. You find a loan that lets you buy the house with nothing down, and let's just even say that you end up with an $800 mortgage. Who pays this mortgage? You? Your parents? They don't pay the mortgage they have, so why/how would they pay the one you are about to land? Now you have a mortgage that you can't pay, and your parents can't pay, and everyone ends up out in the street with wrecked credit.

Also, you are not an investor if you are losing money, you are a subsidizer. As AF said, if you can't resolve the underlying causes of why the house is about to go into foreclosure in the first place, there's nothing to solve. In my experience, people on the verge of foreclosure are only postponing the inevitable by shuffling things around.

Alexander Felice · Answer

yeah you might get that lower but will that really help? There are expenses beyond the debt service for a house. CapEx, maintenance, taxes, insurance, other. You may be able to lower the debt service to a point where they can make the payment, but who is going to do the maintenance and capex.

My recommendation is to find the core problem here: inability to pay, unwillingness to pay, or mismanagement of pay. You can help them with mismanagement, and you can help with a temporary inability, but barring that the only way you can help is to subsidize their cost of living.

Alexander Felice · Answer

You want to help your family, which is admirable, but short sighted.

if they can't make the mortgage, they can't make the rent.

if you can make the mortgage payment with no rent, then you should just go ahead and make their mortgage payment for them. If you buy this house and rent to someone who has already proven cannot afford the payment, you will not be helping anyone.

I wish well for you and your family.

Alexander Felice · Answer

Thanks jd!

As Steve Vaughn asked,  is there equity in the house? If so, sell it, that's the only play here.

Steve Vaughan · Answer

@Justin Lee- is there equity in the house?  Is it worth more than what they owe or less?

I think it's ok (but maybe not advisable) if you buy with a new loan.  I wouldn't catch up the arrears and buy subject to the existing mortgage.

Yes, if you plan to occupy the house, there are favorable down payment loans out there for those that qualify.  3.5-5% down.

Kevin Harrison · Answer

maybe if they have some equity you can guide them to refinancing what they still owe for a longer term, even possibly at a lower rate.

Justin Lee · Answer

@alexanderfelice i was thinking if i bought the house, i can get a much lower mortgage payment and help my parent's pay for it.

Buying a house with no money down??

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