Money for nothin' deeds for free


Now look at them interest rates that's the way you do it
You play investor but got no dough
That ain't workin' that's the way you do it
Money for nothin' and deeds for free



Put nothing down and don't worry much about monthly payments -- what's the worst that can happen?

A new breed of real estate investor utilizing the buy now and pay later approach has emerged and is eating at the trough of low interest rates and interest only payments.

"Mortgage markets have been so flush with cash that home buyers are able to layer one risk on top of the other," said Keith Gumbinger, vice president of HSH Associates. "It's possible to borrow more than the value of the home, put in no money of your own and pay a minimum monthly payment."

Three popular investor loan structures are: the piggyback mortgage which involves borrowing the down payment using a home equity loan; interest only mortgage and the minimum payment option ARM which is marketed as a cash flow ARM and provides the borrower with a variety of payment options each month including interest only.

Having been in the middle of the insanity that was the Internet bubble, some of these creative investor financing options are reminiscent of the 1999 IPOs of companies devoid of fundamentals or revenue.

Risky real estate moves [CNN/Money]

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