Greetings! This is not Fantasy
Land. This is where dream and day unite. This is where you come
when you have given yourself permission to accept that you can
own your own home.Yes,
you've scoured your neighborhood and, as luck would have it (for
those who take action are favored by the gods of good luck),
you've found some great places to live. So, you started by
putting a number of homes on your shortlist, and now you've
narrowed the selection down to your three most favorite. And
now...now the question is: will you actually be able to afford
one of them?
Well, you wouldn't be thinking
about this is you were independently wealthy and could buy the
home outright. So, you're going to need to take a mortgage out,
and that means you're going to need a down payment, and that
means...you need to HAVE a down payment from some source. Now,
you're tired of waiting to have your own home, and you do have a
really great buy here, and no great buy lasts forever. You
really need to find that down payment.
Now, you know that you want to
be able to pay at least 20% of the total price of the house as
your down payment. This is home loan industry standard. You show
a good commitment to the house and home ownership, and the
lender is confident enough to give you a better interest rate as
a result. Yes, it's a win-win situation.
But...what if you haven't been
saving your pennies for this moment? You've had lots of
responsibilities, or the sudden desire for the dream home came
out of the blue, or you (like so many people) really never
thought about it in advance. After all, people don't plan to
fail: they fail to plan.
But...there are a number of
ways out of this predicament. No, giving up on that house of
your dreams is NOT one of those ways out!
Let's take a look...
You Can Tap Into Your 401(k)
Yes, you're allowed to take
money out of your 401(k) for a situation like...buying a house.
Now, you'll need to pay that money back over a number of years,
and you'll have to pay interest, too. The good news is that this
isn't considered another debt against you by lenders.
Unfortunately, you had better stay with your current employer
until the loan from the retirement account is fully repaid, or
else you must pay it all up within 90 days of the day you leave
your current employer or face the wrath of the government
regulators. Yikes!
You Could Ask for the Help of
Non-Profit Organizations
There are non-profit
organizations that have programs for people with low (or even
moderate) incomes which are designed to help people buy their
own home. These programs work in various ways depending on the
organization.
There are non-profits which
have volunteers who rebuild old houses and then get deals for
extremely low (or no) down payments for those who would buy the
renovated house. There are similar programs that help borrowers
who are willing to put in "sweat equity"--they have to help
build their own house and/or build other houses, too.
But, there are times when you
just need to wait. If you are in a situation where you need or
desire to have that 20%-or-more cash down payment, here are a
couple of other ways to turn:
Investing in Mutual Funds
These are relatively safe, yet
can give you excellent returns on your money all the same. Set
money aside each month, invest in a good mutual fund found with
a financial advisor's help, and then in several years use the
returns to put a down payment on a home of your own.
Controlling Your Budget
Most people spend money that
they really don't need to or even shouldn't. If you can find the
way to save an additional $100 to $200 per month or more, every
month, for several years, you could come back and look at
putting a good down payment on a home again. Start by writing
down every penny--EVERY penny--that goes out of your wallet or
account. Leave not a penny unaccounted for. You can find ways to
spend less and save more and still have a good life!
But, if your heart really is
set on buying your own house NOW, you could always:
Get Advice from Your Realtor
You Realtor has contacts with
people who know how to find the best loans for people who
qualify for them. For instance, FHA loans require less than a 5%
down payment but can still get you a good interest rate. You
might qualify.
If you want a home of your own,
you need to make things happen.
