The American dream of home ownership seems out of the reach for those among us who cannot afford a down payment. Even loans that are specifically designed for those with lower incomes require some sort of down payment, like the FHA loan, which requires a down payment of 3.5%.
Getting Past The Down Payment Home-Buying Hurdle
While there are some no-money down loans, like a Veteran’s Administration loan, for instance, those opportunities are limited in who can apply (in this case, veterans of the armed forces). Some banks ask borrowers to pay a whopping twenty percent down.
So how does a would-be homebuyer come up with the down payment that is needed to get past this all too common home buying hurdle? There are a number of ways that you can come up with your down payment.
The most obvious one may be the smartest, or at least the most logical. Save for it. Although saving money in this economy can be hard to do, it is the best way to approach getting the down payment that you need to realize your dream of home ownership.
Plan Ahead If You Really Want That Home, It’s Worth It!
Even if it takes you several years to come up with a down payment, you will have the satisfaction of reaching a financial goal. Some people also take on a second job and dedicate the proceeds from that extra stream of income solely towards the down payment on their home.
Another option is to borrow from your IRA, if you have one. First time buyers can pull out as much as ten thousand dollars towards the down payment, penalty free. Keep in mind you still are required to pay income tax on the money that you withdraw, but it is still a good option for a number of folks who want to get in the home market while mortgage interest rates are low and inventory is high.
Some people tap into relatives for the money, and parents are the main go-to people to borrow that initial down payment from. Some won’t even expect it back. Mine didn’t. In fact, most parents are happy to see that their children become homeowners, as it is symbolic of the child settling down and perhaps a precursor to grandchildren in the near future.
When struggling to come up with a down payment, you might consider selling off something of value that you own, like a second car, a boat, and so on. If you have expensive jewelry, or a collection of some type that is worth money, it might be the right time to liquidate those assets so that you can come up with the down payment that you need.
When all else fails, you can invariably look for a lease option on homes in your price range. This will allow you to lease the home with the option to buy once you have financing in place. There are a number of those types of homes on the market, and this can be a good way to get in the home you want now, without having a big chunk of money down.
Article provided by Vickie Nagy who helps home buyers purchase Pleasanton CA real estate. If you’re interested in more information about Vickie you can check out her Blackhawk CA real estate website where you can search Livermore CA real estate including foreclosures.
