It wasn’t that long ago that you could purchase a home with no down payment. It was the thing to do! Find your dream home, make an offer, and move in. It was almost as simple as that. Times have changed. After the recent economic crisis, lenders have strengthened their standards. Not only is a down payment expected, it is required. With this change come several questions for home borrowers.
The first question maybe simply, “Why?” For a lender the down payment is a way to make sure the person borrowing the money is borrowing within their means. It is a way for them to tighten their standards. Part of the crisis we are facing came from home owners who borrowed more than they could handle and who have no equity in their home. Having someone bring a down payment to the table gives them a cash stake in the game. A down payment is good for the person buying the home because it will lower their monthly payments. Another advantage is the down payment gives home owner instant equity in their home. There are situations where you can even borrow against that equity to make repairs to the home.
The second question may be, “How do I get my down payment?” There are several ways you can go about it. You can save up your down payment through an automated savings plan. You can also sell some assets or liquidate stocks, mutual funds or other investments. You can receive it as a gift from a friend or relative. You can also look for programs that help with obtaining a down payment. Many programs that offered down payment assistance are no longer in effect, but there are still programs around for teachers, law enforcement officers, fireman and others in a public service field. Some towns and some states have down payment programs. It may take some legwork on the part of the borrower but it would be well worth your time to check into what may be available.
If you need help “getting down” with all the changes that are taking place in the real estate market, we will be glad to help!! Give Sandy's Team a call at (225) 677-SOLD or email info@sandyco.com we are here it help you in East Baton Rouge, Livingston Parish, and Ascension Parish.
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