The American Education Institute

USE FEDERAL HOUSING AUTHORITY LOAN NO. 203 (B).

As a professional investor in real estate, you may or may not be able to qualify for a government loan to help finance a property purchase.

If you can qualify, of course, you’ll receive the advantages of low interest rates coupled with generally lenient terms and extended time of pay-back.  But one of the very real reasons why you might not qualify has to do with where you actually reside.  The government is (really) in the bushiness of helping voters find shelter for themselves;  it does not generally make public fund available to further the investing purposes of private individuals.  Still, there are federal programs available that provide inexpensive means to obtain housing, and at least you should know about some of them.  One such is know as the FHA 203(b) loan.

The National Housing Act Section 203 (b) provides a source for loans, made by local lenders and insured by by the Department of Housing and Urban Development (HUD).  The federal government insures these loans to protect the lenders in case the borrowers default, and that insurance is funded by special premiums paid by the borrower.  In general, FHA loans may be used to finance or refinance single-family homes on up to four family dwellings.  The maximum amount you can borrow depends on the property’s location within each HUD region.  FHA loans are made primarily on properties that are owner occupied, but properties that are non-owner occupied may be eligible as well.  You should contact HUD in a large city near you or call the HUD office in Washington, D.C.  for further information on these loans.

For your general information, the required down payment with such federally insured loans is about 5% of the FMV and rates are usually about 1% below the market rate for conventional mortgages.  Loans are made for 30 years, and if they were made prior to December 15, 1989, they are fully assumable without qualifying by paying a $45 assumption fee.  The original borrower, however, remains liable on the mortgage for five years ofter the assumption date.  And effective as of December 15, 1989, purchases of FHA financed property may only assume the mortgage by qualifying as if they were the original borrower.  But by so qualifying, they release the original mortgagor (the property seller) from any further liability.

For more information on how you can qualify for this 203 (b) or other FHA loans administered by the Department of Housing and Urban Development, you should contact a HUD Customer Service representative or visit the web site:  www.hud.gov. 

IN CONCLUSION:  MORE THINGS FOR NOTHING

These have been eight more practical methods for creatively buying property with 100% financing.  They include;  making and selling a new note for cash;  supplying the seller’s real estate needs;  repositionioning mortgages;  using closing credits;  making sellers’ rewards;  and borrowing from commissions, life insurance policies, and the FHA.  Again, they positively reinforce the simple truth that you can buy property without using any of your own money. 

With regard to the previous text material and now this text documentation, you have at your disposal 16 different and creative methods on how to do just that.  And you’re about to learn even more 100% financing methods in Dr. Martin’s next blog that will be coming to you soon.

Dr. Eric T. Martin / 100% Financing When Buying Real Estate / 2-12-10