What is a flex mortgage loan?

Here’s how a flex down mortgage works. If you’re looking to buy a home and have a decent, reliable salary, and your credit is strong, there’s no longer any reason to wait until you’ve saved up 20 percent of the purchase price of that house you want — and pour more money down the rent drain. There is a mortgage option that does not require any minimum down payment at all, and it has a competitive interest rate as well.

The Flex Down Mortgage

Most people start thinking about buying a home after they have been out of college for a few years and have settled into their profession. While renting brings fewer hassles in terms of maintenance and upkeep, it ultimately is a poor use of your money, because you are not building up any equity in an investment — you’re just paying off someone else’s mortgage on the house or apartment building where you live. If your credit is solid enough, though, you might qualify to for what feels like a zero down mortgage. Keep in mind that Zero down mortgage do not exist. This mortgage is referred “flex down mortgage.”

With flex down mortgages, you borrow the money for your down payment from a third party — someone other than you and the bank extending you the mortgage. This could be a relative of yours, a friend of yours, a private third party, funds from a credit card advance, or a personal loan. The only requirement is that this party have no tie to the sale of the house — so it can’t be the seller who lends you the down payment, and the bank can’t extend you a second loan to cover the down payment. Your eligibility for this sort of situation depends on your credit, because you are taking out not one but two loans to cover the purchase of the property, and you have to make both payments each month to ensure that you stay in the home. If your credit is shaky, even if your income is high, the bank may balk at extending you this sort of loan.

You may be wondering how the bank would know whether or not you took out a flex mortgage down payment loan in the first place. After all, as long as you show up with that down payment, it doesn’t matter where it came from, right? Well, a part of applying for a mortgage through a traditional lender means giving that lender access to your financials. Often that includes several months of bank statements and payment records to credit cards and your other bills. If you’re buying a $300,000 home, and you tell the bank that you have $60,000 to put down, but you don’t have anything close to that in your bank accounts or investment portfolios, the bank is likely to ask you where this money came from. If it came from an undisclosed loan, you end up risking having the whole deal fall apart.

What if an uncle gives you a check for the down payment? As long as this is a gift (and not a loan), and you have a letter indicating that you don’t have to pay this money back, then you can use it for your down payment in this sort of situation (it’s really cool to have uncles like that around).

Do you need a private loan to serve as your third party financing? Amansad Financial has connections with many individuals and companies who want to invest some capital, and they have chosen the real estate market as their target sector. The reason for this is the relative security of the market: people are the least likely to default on their home loans, as opposed to credit car payments or car notes. No one wants to lose their home, and so private lending is actually a fairly secure investment — more secure than many people think.

So, if you think that you have the credit score and income history that a bank would like to see, but you don’t have the down payment squirreled away, give Amansad Financial a call. We will analyze your financial situation and give you our best advice as to whether or not private lending is the right solution for your needs. If it turns out that a private loan is your best solution, we have a variety of investors who are looking to put money into real estate, so it can be a win-win for all concerned.