Five Ways to Come Up with a Down Payment

Coming up with a hefty down payment can be intimidating, but with a little work and ingenuity you can do it. Here are a few ideas for coming up with the needed cash:

1. Down-Payment Assistance Programs
Many states offer down-payment assistance programs. You must go through an application process and qualify based on income and credit, but if you do qualify, these programs are amazing. Typically you will receive a grant for the amount of your down payment; it’s basically free money from the government to encourage responsible citizens to buy their first home.

2. Try to Qualify for an FHA Loan
If you qualify, an FHA loan can make first-time home ownership much easier. FHA-backed loans typically offer more manageable down payments (as little as 3.5 percent compared to the 10-30 percent required for conventional home loans). These loans are subject to credit requirements but sometimes less stringent ones than other loans.

3. Help from Family
If your parents or other relatives are in a financial position to help you purchase your first home, they may be happy to do so. Approach the conversation with a gracious and humble mind frame and don’t expect a specific outcome. Emphasize that you are ready to become a homeowner and begin solidifying your financial future, but that you don’t have enough cash on hand for a down payment.

Perhaps you are planning to get married in the near future. Instead of asking your parents to help you pay for the wedding, ask for help with a down payment—a smaller, more modest wedding may be well worth becoming a homeowner. As long as the gift is less than $13,000 (or $26,000 for a couple), you shouldn’t have to pay income taxes on it, either.

4. Boost Your Income
Instead of looking at your current income and thinking that saving a chunk of money is impossible, ask yourself how you can earn more money. Options include freelancing on the side or getting a job on the weekends working retail or at a restaurant. No matter how you choose to boost your income, the main goal is to continue living on your old income while putting away any extra money.

5. Borrow from Your IRA
While taking out a loan from your retirement account is generally frowned upon and penalized with taxes and early-withdrawal fees, one exception is borrowing from your IRA specifically for a down payment on a house. If you qualify, you can borrow up to $10,000 penalty-free toward a real estate purchase.

Are you thinking about purchasing a home and looking for advice on where to start? Give me a call at (626) 252-0839,  we will sit down and draft out a plan for your specific situation, whether it be buying something this month or 6-12 months down the line, its important to have knowledge and tools available to you. Let me help! 

Are you wondering what your home would sell for in today’s market? Click HERE for a free estimate! 

For a more in depth consultation please contact us directly at (626) 252-0839

Life after a BK, Foreclosure, and Short Sale. How long do you have to wait to buy your next home?

“Yesenia, how long do I have to wait before I can buy a home again?”

This is a question that I get asked almost on a daily basis. You’ve made it through the storm; you filed for Bankruptcy, you went through a Foreclosure, sold your home in a Short Sale, or maybe you were lucky enough to get a Loan Modification and now you are ready to sell your house and move to a different neighborhood but don’t know if you’ll qualify to buy the next place? My friends over at Pinnacle Mortgage have put together these handy charts that give you the break down on time frames based on what kind of financing you are looking to obtain and based on whether you went through a BK (chapter 7, 11, or 13), Foreclosure, or if you did a short sale.

2015-09-15 10_38_34-Shortsale-Foreclosure timelines

2015-09-15 10_38_50-Shortsale-Foreclosure timelines

As you can see, there is a difference between the requirements or guidelines of FHA vs Conventional vs VA financing. There are also exceptions that are sometimes made based on extenuating circumstance. To be eligible for the reduced seasoning time due to extenuating circumstances borrowers must have re-established credit for 2 years and provide letters of explanation and documentation evidencing the incident was not due to financial mismanagement (aka you just didn’t feel like paying on a house that wasn’t worth what you owed on it). Here are some examples of acceptable situations:

  • Death of primary wage earner
  • Long-Term illness or disability not covered by insurance
  • Prolonged loss of employment for reasons beyond borrower’s control (ex. closing mergers)

Where Do I Start?

The best way to see if you are ready to purchase your next home is to give us a call so we can set up an appointment with one of our lending partners who will sit down with you and go over your specific situation. Best case scenario is that you have already fulfilled the lender’s seasoning requirement and are ready to start looking for your house! Worst case scenario? our lending partner will be able to sit down with you and write out a plan of action so that while we are waiting for the seasoning requirement to be met we can also be working on other factors such as your credit, outstanding debt, and income.

Give us a call or shoot me an email and we can start working on getting you into your new home!

Direct: (626) 252-0839

Email: Yesenia@NewCenturyBroker.com

Web: www.NewCenturyBroker.com