Learn How to Secure a Sizable Down Payment
As a result of tightened standards by lenders, down payments have become even more important as borrowers begin the planning stages of their home purchase. With more money on the table, lenders will be quick to approve your loan, and borrowers will most likely receive the best rates as well.
“Very few zero-down loan programs exist,” says Bill Plattos, Executive Vice President of First Team Real Estate. “FHA loan of course is one way depending on the sales price of the home.”
What some buyers may not realize is that it can assist an agent in negotiating a better price or beat out competition with multiple offers, says Plattos. Buyers should be sure to leave behind some reserves for emergencies. Depleting your entire savings with your down payment is a common mistake; make sure to have some cash on hand to handle the unexpected cost of any repairs and maintenance that may be required.
If you are finding it difficult to save up a sizable down payment, there are steps you can take to achieve this goal. To start, try setting up an automatic savings plan. Set up your checking account to automatically transfer a certain amount of funds over to your savings after each pay period. Weeks later, you’ll be surprised by how much you have saved up.
If you have an extra car, or a boat or motorcycle you aren’t using, now would be the time to sell it. Cashing in any collectibles or assets can free up quite a bit of funds to go towards your down payment for your new home. In addition, liquidating stocks, mutual funds, savings bonds or other investments can also help. Cashing in any extra assets will only add to your growing down payment sum, says Plattos.
Additionally, you may qualify for a special homebuyers’ program, depending on your state, adds Plattos. For example, First Team® Real Estate is offering a Housing Stimulus Package, which could save you up to $40,720 to put towards your mortgage if you use the company’s essential bundle of services, escrow, title & mortgage. Additionally, HUD’s Good Neighbor Next Door program offers teachers, police officers, firefighters or other public servants extreme discounts on homes in certain neighborhoods. Buyers should contact a trusted real estate professional to discuss some of these possibilities, which are great options for those worried about the size of their down payment.
Also keep in mind that lenders may want to know how your down payment was sourced in order to ensure you can control and sustain those funds with a monthly mortgage payment in the picture. Gifts from friends or family are usually accepted up to a certain percentage, but borrowed money that is required to be repaid is not.
“Don’t be discouraged if you are lacking a down payment,” says Plattos. “By contacting a real estate professional and also your state government, you can learn about any possible down payment programs run by state and local housing authorities to figure out the best possible option for your situation.”
For more information regarding down payments or financial assistance programs, please visit First Team Real Estate.