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5 Unusual ways to manage your home down payment


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Most of us want to be an owner of a decent home, but the hefty down payment needed for buying a home creates difficulties towards owning a property. It is because most lenders demand for a 20% down payment on the mortgage when you choose to opt out of private mortgage insurance. Unless you have saved a lot of money or you’re a wealthy person, paying 20% on a $200,000 or $250,000 loan amount is very hard to do. Thankfully, future homeowners have several options to avoid giving up on the dream of a new home. From having a part-time job to selling commodities, there are a lot of uncommon options you can come up with.

1. Boost income with a part-time job

The real estate meltdown that happened few years back had encouraged more stringent requirements to get a mortgage. Those days are over now when you can get 100% financed mortgages and zero document loans. Today, financial banks and mortgage lenders are going to ask for plenty of paperwork, a DTI ratio not more than 43%, and also 20% of the total loan amount as down payment. Few lenders will agree to accept low down payment initially, but, later borrowers might have to pay higher interest rate.

Borrowers who can’t pay 20% of the loan amount as down payment need to pay for private mortgage insurance (PMI) that can raise the monthly payment approximately by $100 or more every month. So, to bear this extra cost, borrowers may choose to get a part- time job to fill up the excess amount required for down payment. By getting a second job and keeping the money for savings, you can easily arrange the down payment.

2. Check out downpayment assistance programs

People who can not afford 20% down payment and also the PMI, they can opt for different mortgage assistance programs, which they can easily qualify. For example, veterans and military personnel can go for VA loans approved by the U.S. Department of Veterans Affairs. VA loans require zero down payment but have a good interest rate attached to them. Different states also have their specialized home loan programs designed for first-time home buyers who can’t fulfill certain credit, income, and home price requirements.

3. Sell some of your things

Selling your used products or goods can be a good way to raise needed money for the downpayment. The Internet is the easiest way to sell your goods, from shoes to clothes, from books to DVD’s, in your locality and all over the world. Some of the websites let you do it for free while others may charge you or take a bite from your revenue. So, by selling your things online and through a garage sale, you can definitely arrange enough cash for your mortgage down payment.

4. Live a low-profile lifestyle

If you want to earn for your home but you don’t have sufficient time for another job, then living a low profile lifestyle for some time may work for you. If homeownership is the thing you want most, then a sudden downsizing move like selling your car or selling your apartment can achieve that money required. You can reduce extra expenses from your daily routine, save as much as possible from utility bills, credit card bills and other costs.

5. Expect a gift from family

Asking money from family or friends may not seem like an easy option. But, if you have some relatives who have enough cash or asset to back you up, then asking for a financial help would be a preferable choice for you. If they gift you some or all of your down payment, they’ll not only be doing a good deed but they can get a tax write-off from it. As per the federal law, gifts received from relatives, especially cash, have tax benefits. That tax break is applied to friends also. So, if you can arrange a family member or a good friend who possess sufficient wealth to help you out, that will be your lucky day.

If the down payment becomes the prime obstacle to fulfilling your dream, there are a lot of non-traditional ways to raise cash for it whether that requires having a part-time job, asking help to your friends or cutting off your luxuries.

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