How to Buy and Sell a House With No Money In Colorado

house buy and sell concept

The traditional house buying and selling processes involve major costs, including real estate agent commission, down payment, property tax, and closing costs. 

However, if you have little or no money, you might have some options to work with when selling or buying a house. 

They include loans, seller financing, government payment assistance programs, joint ventures, and private loans. 

Table of Contents

How to Buy a House Without Money

Mortgage

Even if you qualify for a home loan, you require money to pay the down payment and closing costs. However, if you have little or no money to pay for the down payment and closing costs, consider getting payment assistance from the government or getting a credit card loan or a bridge loan.

Bridge Loan

If you anticipate getting money soon but need to buy a house before that money sets in, you can get a bridge loan to cover your down payment. As the name suggests, a bridge loan is a short-term loan that bridges the gap between demand for money and its availability.

It is a great option if you are in the middle of selling your house, but you have a chance to buy another one. 

Therefore, you get a bridge loan to pay the down payment for the house and then pay off the debt from the sale proceeds of the other house. Note that bridge loans have a higher interest than standard loans.

Credit Card Loan

With a strong credit card score and limit, you can take a loan toward a down payment for a mortgage and closing costs.

Government Loans and Payment Assistance Programs

American citizens in certain careers and areas can qualify for specific payment assistance programs.

VA Loans

VA loans are aimed at helping military service members, veterans, and their eligible surviving spouses to buy homes. The loans are offered by regular mortgage lenders such as banks. 

However, through the department of Veteran Affairs, the government guarantees the loan to make it more accessible. These loans have lower mortgage insurance compared to getting a mortgage directly from the lender.

You can benefit from two VA loans: Purchase loan and a Native American Direct loan. In both, you are financed the entire sale price of the house up to the appraisal value of the house. There is no down payment, but you are required to pay a funding fee and meet the closing costs.

USDA Loan

The Department of Agriculture offers loans in specific rural area regions. USDA loans are mainly aimed at helping less privileged persons with affording land in expensive states. To qualify, your income must be significantly lower than the median income in the state where you want to buy the home.

Aside from your income, debt-to-income ratio, and credit score, there are other requirements regarding the home’s square footage, sale price, and design. Also, the loan limit varies from one location to another. 

However, the loan interest can be as low as 1%, and there is no down payment or monthly mortgage insurance.

Good Neighbor Next Door (GNND) Program

The GNND program is available to law enforcement professionals, firefighters, K-12 teachers, and individuals in other specialized careers. It is implemented through the United States Department of Housing and Urban Development (HUD).

The GNND program works because the HUD acquires certain eligible homes in the revitalization area and lists them for 50% of the market value price. 

GNND members are given priority in the first seven days. Therefore, if you are a GNND borrower, you have to stay up to date with the HUD listings to stand a chance of qualifying for the program.

Seller Financing

Seller financing is also known as owner financing or a purchase money mortgage. It is when the seller finances you fully or partially to buy the house. 

It works like a normal mortgage purchase; only you pay the seller instead of the bank or a traditional mortgage seller. 

However, the interest rate may be higher since the seller takes up a high risk by financing you. Overall, the process is faster as long all parties agree to the terms of the purchase.

Seller financing takes many forms, including:

  • Free and clear financing. If the house is on a mortgage, the seller completely pays off the home. You then agree to a down payment, purchase price, interest, and a repayment plan. All the repayment money goes towards the seller.
  • Junior mortgage. The seller pays for your down payment so that you can secure a mortgage from a traditional seller.
  • Rent-to-Own. The seller will rent you the property at above-market rates. A percentage of the rent goes towards buying the house.
  • All-Inclusive Deed of Trust. This type of seller financing works if the seller has an existing mortgage on the house they are selling. It is also referred to as a wraparound mortgage. The seller continues to make mortgage repayments from the amount you pay them. They also keep any amount that exceeds the mortgage payment.

However, this option may not work if the mortgage has a “due on sale clause.” It is also risky for you as the buyer. The bank can repossess the house if the seller hasn’t been making the mortgage payment.

Lease-Option Agreement/ Lease Purchase Agreement

In a lease-option agreement, you have the right to purchase the house at the expiry of your lease. However, you are not obligated to, so you can opt not to.

The main difference between a lease-purchase agreement and a lease-option agreement is that in the purchase agreement, you are obligated to buy the house, while in the option, you are not.

Therefore, in a lease-purchase agreement, you must have your financing lined up before your lease expiration to make a cash offer or a down payment for mortgage financing.

Private Lenders

A private lender can be anyone with extra money willing to lend it to you with interest. It can be your family or friends or even a real estate investor. Private lending gives you more flexibility in setting the terms of the loan.

For instance, you can negotiate between a flat loan and a reducing balance loan. You also have leeway for negotiating the duration of the loan and repayments. Notably, these types of loans have a higher interest. The lender will require a promissory note, mortgage, or trust deed on the property.

Hard Money Lenders

Unlike private lenders, who are mostly individuals, hard money lenders are companies that offer specialized short-term real estate loans. Typically, the loans have a 6months to 2 years repayment period.

Home Equity Loan

You can borrow a loan against your existing home’s equity and then use it to pay a down payment for a separate mortgage.o

house buy sell illustration

How to Sell a House Without Money

Get a Loan to Meet the Seller’s Costs

Whether selling your own house or flipping houses, the best way to sell a house without money is to get a loan to meet the cost of preparing the house for sale and closing costs. Then, use proceeds from the sale to pay for the loan.

You want to keep your selling costs low. Therefore, minimize your expenditure with staging, repairs, and upgrades. You can also opt not to hire a real estate agent and list the house on social media or through multiple listing services.

Sell to a Cash Buyer

The sale process is simpler than a traditional sale process, so it is much cheaper. You can directly contact a cash buyer in your area without a real estate agent. 

They will give you a cash offer for your house regardless of its condition. If you do not have money for closing, you can negotiate to have them cover it and deduct it from your sale price. 

If you’re in the area looking for a legitimate cash home buyer, contact WeBuyHousesInDenver.org.

Conclusion

Many people think they can’t buy or sell a house if they do not have the money upfront. However, as discussed above, it is evident that there are various options that they may be eligible for.

In most cases, it involves either getting a loan to pay a down payment for a mortgage. You could also benefit from payment assistance programs. 

If selling, the fastest and most cost-effective option to sell a house is to a cash buyer. Alternatively, take a loan to cover your selling costs and then pay it back from the proceeds.

If you are looking for a cash buyer in Denver, contact webuyhousesindevers.org.

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