How to Buy a second home with no money out of your pocket and no pain

The real estate market has been in slump for a long time.  The recession is probably at the late stage if it is not over.  In fact, many noble economists have declared the recession is over.  The housing markets in many areas have showed signs of turning the corner to begin to recover.  However, this is still a buyer’s market.  The buyers have more negotiating power.  The mortgage rates are in historical low and the government is offering incentives for new and repeat buyer.  I have found ways to buy a second house myself without much money form my own pocket.  It is for real.

The first thing to do is to get a home equity line of credit (HELOC) – If you have owned your current home for a while and have been paying your current mortgage, you should have accumulated equity on your house.  Check your local newspaper for the local bank’s HELOC offers.  You can go online to web sites, like lending tree, to get quotes if you are comfortable.  Many banks offer low rate and with no application fees.  Compare the offers and go with the lowest rate with no fees.  Apply a HELOC as high as available.  HELOC is counted as your own money out of your pocket.  You can use them as down payment.

Get a mortgage pre-approval – This is a very similar process as getting a HELOC.  Research your local newspaper or go online for review the offers.  Website, such as lending tree will have banks to bid for your business.  You should be approved if you have a stable income. Compare and get a few pre-approvals.  Keep the contact information handy.

Find a good realtor – The easiest way to buy real estate is through a realtor.  He/she will not get paid until you settled.  Tell the realtor what you need, and let him work for you and earn the commission.  Be sure to commend your realtor.  A good realtor will not pressure you.

Finding a house – this is your chance to move up.  You will move and live in the second home to enjoy the government rebate.  Buy the house you can afford in the location you prefer.  Your HELOC should be higher then the 20% down payment and closing costs.

Get a mortgage and use your HELOC for down payment and closing costs – Go with the lowest “APR” mortgage.  Be sure to negotiate the fees.  All the fees should be about $750.

Rent out your first home – the rent should be able to cover your mortgage, property tax and insurance on your first home.

At then end, you own two houses and only paying the one (new) mortgage.  You improve your place to live and the property taxes and mortgage interest are tax deductable.