Different Programs and Approaches to Afford a Down Payment
For many first-time homebuyers, one of the biggest problems they deal with when purchasing a home is having the ability to afford a down payment. With the misconception that you need access to a pile of cash before purchase, people often hold back from starting their journey to homeownership. However, after starting the purchasing process, many consumers are surprised to learn how little initial investment they actually need. In reality, there are different programs and approaches you can take to rack up the money you need, allowing you to get the keys to your new home. If you feel ready, get a free rate quote online today or contact a mortgage advisor. If you still want some advice, keep reading to find out what approaches and programs are available to you.
1. Savings Plan
Creating a savings plan might take time, but it is a guaranteed way to keep your piggy bank full. Set a deadline to accomplish your goal and stick to it. An efficient plan to see if you’re ready to purchase your dream home is to calculate your current housing cost and what your projected mortgage payment will be. Then, put the difference away into a savings account each month. This is a great way to test if you are willing to be spending that kind of money and/or if you have sufficient funds for your future home.
2. VA Loans - For Those Who Serve
Veterans and current military service members might qualify for a range of benefits. One of the most intriguing of these is the VA Loan program. This program gives you the opportunity to purchase a primary residence with minimal down payment. (Thanks for serving our country!)
3. Liquidating Recreational Vehicles and Household Items
Have a couple of extra flat-screen TVs that you bought on Black Friday collecting dust in the basement? What about an old historical car out in the garage? These are great items to sell and a way to earn cash for a down payment. If you have some belongings that never come to any use, consider having a garage sale or list items on eBay. One thing to always remember is to have a paper trail for every asset you sell. Having documentation is a guaranteed way to make sure there won’t be any kinks when going through the loan process.
4. FHA Loan
This type of loan is great for any first time home-buyer, but it is also superb for customers who are worried about being able to afford a high percentage down payment. The FHA Loan has helped many people purchase a home with little initial investment. This is a great program that lends a helping hand to those in need of assistant when becoming a homeowner.
5. Gifting Cash
Do you have a rich uncle or sweet little old grandma who is willing to fork up some money to their favorite relative? You could also always ask for some cash as birthday or holiday gifts instead of presents. Gifts from family members have been a long time source of down payment cash for first-time homebuyers. But like everything else, it is imperative that you have this in writing. The record you provide requires proof that the donor doesn’t expect the money back and that it is in fact a gift. Like most things in life there are restrictions like, how much a person can gift. (To learn all limitations, visit the IRS site here)
Overcoming the hurdle of affording a down payment is no easy feat, but if you eliminate unnecessary expenses, liquidate unused assets, (suck up to family members), and choose a program that is the right fit for you; you could find yourself on the track to purchasing your first home. If you have any questions about recommended down payments or need other tips on how to save money, please feel free to contact a financial advisor today. If you think you are ready to take the next step, go ahead and get a free online rate quote using our multi-step calculator.
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