More Ideas on How to Come Up with a Down Payment

by on January 20, 2012

A recent study was done to determine why more renters were not taking advantage of historic low interest rates and incredible prices on homes, relative to what they were 4 years ago and this is what they found:

  • According to a survey by Trulia, the biggest barrier to buying a home these days is saving for the down payment.  The survey, conducted over the summer, found that 51 percent of renters said coming up with money for the down payment was preventing them from buying, while 35 percent identified qualifying for a mortgage as the stumbling block.

With this in mind, here are some ideas of how to deal with the lack of a down payment:

  • Under federal tax law, each individual is permitted to give money or valuables worth up to $13,000 to a single recipient in a calendar year.  A married couple could jointly bestow up to $26,000 a year per recipient.
  • According to one financial planner, there also is the option of lending a relative or close friend the money for the down payment, or the closing costs, then forgiving the loan in a future year.  The recipient would have to pay interest on the loan until it was forgiven, at which point it would become a gift.
  • Another way to help with the down payment is to pay other expenses, such as tuition, thereby freeing up money to make a home purchase.  Gifts for educational or medical expenses are not subject to taxes, as long as they are paid directly to the educational or medical institution.
  • However, prior to giving the money, gift-givers should consider their own financial picture, and they should make sure the recipient is responsible and not behind on other payments that could be subject to debt collection.

Another option is to take advantage of the many programs offered on the City, State and Federal level to provide down payment assistance. Many of these programs are primarily for First Time Home Buyers, however there are many programs that have various parametersfor what qualifies as a First Time Home Buyer, such as the Housing Trust Santa Clara County ( learn more by visiting their website at: http://www.housingtrustscc.org/). Call me for details or to ask questions on what your options are or visit some of my earlier posts for details.

The long and short of it is that with the right Realtor and Loan Agent, ANYTHING is possible.

I am here to help. Call TODAY at 408-839-2125 for an in-depth analysis of all your options!

 

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