If you’ve been thinking that a home purchase may be in your future, now’s the time to start saving for the down payment. Read on to learn some ways to come up with the down payment for a home.
Look For Down Payment Assistance Programs
One way to find them is through Down Payment Resource, which calls itself “a Web-based software company with a mission to connect people with hard-to-find financial resources.”
The site takes your address or city, estimated annual income and number of people in your household. It asks if you are an armed services veteran or Native American. It delivers a list of programs for which you may be eligible, links to details and contact information for participating lenders in your area.
Or, look for programs near you by typing “down payment assistance programs” and your city’s name into a search engine. Income requirements typically apply, but check to learn if you are eligible. Source: Msn.com
Supplement Your Income with a Part-Time Job
One of the byproducts of the real estate meltdown of a few years ago is more stringent requirements to get a mortgage. Long gone are the days of 100% financed mortgages and zero document loans. These days’ banks and lenders are going to require a lot of paper work, a debt to income ratio of no more than about 43% and 20% down. Some lenders will accept a lower down payment, but usually borrowers pay for it in the interest rate. Borrowers who come to the table with less than 20% typically face private mortgage insurance (PMI) that can increase the mortgage payment by $100 or more each month. Because of the extra cost borrowers should do everything they can to come up with the down payment and one option is to get a part-time job to supplement their income. By getting a second job and putting all the money into a savings vehicle to be used only for the down payment not only will they be able to increase their nest egg but they’ll be too busy working to spend extra money. Source: Investopedia
Ask For a Gift from Family
Understandably, many home buyers turn to their family for help buying a home, and for good reason: There are no limits on how much a family member can “gift” another family member, although only a specific portion can be excluded from taxes ($14,000 per parent).
But it’s not just as easy as that. Gifters, even family, will need to provide paperwork in the form of a gift letter. And if the gifter is a friend, it gets even more complicated. For example, you’ll have to wait about 90 to 120 days before you can use any of those funds. Source: Realtor
Gary Wong, MBA
2105 West 38th Avenue,
Office Phone: 604-263-1911