How to Come Up With a Down Payment

Not long ago, no-down-payment loans were big for homebuyers. But now that lenders have tightened their standards, borrowers once again are expected to pony up some cash of their own for a down payment.

Many homebuyers have difficulty coming up with a down payment. Here are some ways to do it:

• Set up an automatic saving plan.
• Get a gift from your parents, grandparents, other relatives or friends.
• Sell a car, boat, motorcycle, collectibles or other assets.
• Liquidate stocks, mutual funds, savings bonds or other investments.
• Allocate your income tax refund.
• Take a loan from your 401(k) retirement plan and repay yourself with interest.
• Withdraw funds from your 401(k) plan, subject to taxes and penalties.
• Collect on a loan that you made to someone else.
• Get a bonus from your employer.
• Explore homebuyer programs for public servants if you qualify.
• Apply for a state or local government down-payment program.
• Use a private down-payment assistance program.

Lenders need to know how you obtained the funds and that you've had control of those funds for at least several months.

Gifts and seller's concessions are acceptable, up to the percentage allowed by the loan program, but borrowed money can't be used as a down payment, as it is debt that has to be repaid.

Two government-run programs are designed to aid homebuyers who haven't saved much for a down payment. The Federal Housing Administration offers mortgage insurance that allows qualified buyers to purchase a home with a 3% down payment, all of which may be a gift. The U.S. Department of Veterans Affairs offers a home-loan guarantee program that helps military veterans buy homes with no down payments.

Conact us for more information on this article, or if you have questions pertaining to anything we wrote in this article. Use the comment link below to do that, and rest assured, your privacy is protected, we do not publish email addresses at this stie.

Real Estate News - September 2008

Our September 2008  Newsletter is now up…

From the right Nav Menu, Find "PAGES AND NEWSLETTERS" and Select "September 2008 below "Our Monthly Newsletters".  

Foreclosures: We Have to Warn You!

Seems everyone these days thinks they can score a house on the cheap by buying a foreclosed property. There are good deals to be had, but we have to warn you, the process is complicated and risky. Foreclosure properties are much like fire, and you know the old saying, "play with fire, and you could get burned."

There are three different stages of foreclosure, each of which presents different opportunities for buyers. The first step is to figure out which one makes the most sense for you, if indeed any of them do.

Pre-foreclosure

A home goes into pre-foreclosure when a borrower has fallen behind on his payments, but the house has yet to be auctioned off.

Buyers can find pre-foreclosures by sifting through the delinquency notices that lenders file with county courthouses when a borrower misses a payment.

Some owners are open to doing what's called a short sale, which is when a buyer pays less for a house than the mortgage that is owed on it. Lenders have to agree to a short sale, and will then forgive the rest of the debt.

Often, banks are reluctant to approve of such deals since it requires them to take a loss. This process can take months and a lot of badgering before a deal goes through, and not every buyer is up for that kind of hassle.

Sheriffs' sales

Another stage of foreclosure is when homes in default are auctioned off on the county courthouse steps. These homes can be real bargains, but the process is a crap shoot.

Bidders can't inspect the property, so there's no telling how much work it needs. And there is also no telling what kind of liens there are against the home, due to unpaid taxes and so forth, which can also jack up the cost of these homes. Finally, buyers need to come with cash, ready to put 10%-20% down on the spot, and able to pony up the rest in a matter of days. This method of buying a foreclosure is not for the beginner or first time homebuyer!

Post-foreclosure

After a lender takes back a house, the property goes on the market as what's called an REO (real estate owned) property. These are treated like ordinary sales, listed with a broker. Typically, bargains are not as sharp.

If you want to dive into the foreclosure market, this is the only method we recommend you even think about. The process is fairly clean, the title is clear and the property is delivered vacant, even though the prices may not be as low as a courthouse steps auctioned property may be.

Talk to us if you feel brave and want to explore the foreclosure market. We'll let you know if there are any such properties in the market and in your price range of affordability.

Lengthening Check Float Times

Not so long ago, getting funds into your checking account to cover a check you'd written was much easier. Electronic banking has all but eliminated the check float… or has it?

Money Talks editor Stacy Johnson looks at some ways you can lengthen the float time on your money. The video runs 1:26…

Do you ever wonder why banks can process a check against your account almost instantly, but it can take 24 hours for a deposit to show up when you make it? What do you think? Are banks using our money without our permission? Leave us your opinion by clicking on the comment link below and sounding off. We'd love to hear from you.

Home Prices Down 7.6%

The National Association of Realtors (NAR) reported recently that 'Nationwide, the median existing single family home price plunged 7.6% to $206,500 in the second quarter, down from $223,500 in the same period of 2007. The median price represents the point at which half of all homes sold for more and half sold for less.'

A record number of foreclosures helped drive down prices, according to NAR. In fact, foreclosures and short sales accounted for about one third of all existing homes sales.

Now we seem to be getting into a time when the real economy is starting to affect housing markets more. It's a little bit of a contest now.

What do you think? Will lower prices stimulate home sales, or will the slowing economy slow down sales? We'd love to hear your opinion. Just click the comment link below and tell us what you think.