4 Down Payment Assistance Ideas

 

 

Are you wasting thousands of dollars on rent and dreaming of becoming a homeowner? You can already make a monthly house payment (you’re already paying rent), but the problem is coming up with money for a down payment.  It’s not as difficult as you might think. Here are ways to get a down payment with little out of your own pocket.

1. Look Into Local or Federal Government Programs.  You may qualify for special government programs, such as those for first-time homebuyers and members of the military.  You also may have access to aid from Fannie Mae and Freddie Mac (government-sponsored mortgage programs).  Additional resources are non-profit and community groups and state agencies.  There are too many programs to list here and they expire or change frequently. 

2. Have the Seller Finance You. Some sellers may be willing to help you buy their homes. In a “seller take-back,” the seller holds a second mortgage for you and becomes your lender.  You would make your monthly mortgage payments to the seller.

3. Use A Tax Refund. There are options for you to borrow money for certain investments to a specific level and use those investments to generate a significant tax refund.  Obviously, the timing has to be right to so you can use it as a down payment on a home.

4. Ask A Relative or Friend. Tax law allows gifts of up to $13,000 a year to be given without tax consequences to the giver or recipient. This gift-exclusion amount is adjusted annually to reflect inflation (see IRS publication 950 for the current amount).  You can even get a gift from each of your parents or two friends without them having to pay a gift-tax, which bring it up to $26,000.   

This is a great way to get a down payment for a home. In fact, one out of four first-time homebuyers use a gift to make the down payment.  Even if this isn’t your first home purchase you can still use a gift so you don’t drain your savings.  Usually lenders require you to have some money still left in your bank account after closing so they know you’ll make the mortgage payment each month.

Also, using a gift for a down payment allows you to buy the home you want even if it’s not Federal Housing Administration (FHA)-approved.  Some buyers are able to get FHA mortgages that have down payments as low as 3.5% of the purchase price, but others will have to put more down.  With a gift, you can put the typical 10% to 20% down that most lenders require. For example, if you had to put down 10% on a $150,000 home, that’s $15,000. Or, 20% would be $30,000. A gift from relatives and friends can get you there but some of the rules differ depending on the lender you choose. Contact me at 813-419-7009 for a buyer consultation. Together, we can make your goal of owning your first home a reality.

7 Reasons to Own Your Home

Buying a home is one of the biggest and most rewarding ventures of your life. Whether it be purchasing an investment property or your first home, it takes much consideration and planning. In today's market, I always recommend buying vs. renting. In many cases I see renter's paying almost $200 more to rent a smaller space, than it would be if they purchased. There are many reasons to own a home. Here are a few to consider.

1. Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage,your property taxes, as well as some of the costs involved in buying your home.

2. Appreciation. Real estate has long-term, stable growth in value. While year-to-year fluctuations are normal, median existing-home sale prices have increased on average 6.5 percent each year from 1972 through 2005, and increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®. In addition, the number of U.S. households is expected to rise 15 percent over the next decade, creating continued high demand for housing.

3. Equity. Money paid for rent is money that you’ll never see again, but mortgage payments let you build equity ownership interest in your home.

4. Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.

5. Predictability. Unlike rent, your fixed-mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.

6. Freedom. The home is yours. You can decorate any way you want and benefit from your investment for as long as you own the home.

7. Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

Online resources: To calculate whether buying is the best financial option for you, use the “Buy vs. Rent” calculator at www.GinnieMae.gov.