Special offer

Evesham Twp Nj/Southern NJ Ready to stop paying rent and buy a home but short on cash needed to close?

By
Mortgage and Lending with Village Home Mortgage

 

     Many potential first time home buyers find themselves in similar situations as we enter July 2009.  They want to take advantage of the $8000 tax credit for first-time home buyers, purchase while the prices are declining, and know they can afford the payment of the new home. Only one thing stands in their way; cash.  While their current rent payment may be just slightly lower than what their housing payment would be, the funds needed for down payment and closing costs are just not available to many people right now.  So, how can you purchase a home if you have limited cash available?

1.   Down payment Funds- Ideally a customer should have the minimum down payment for an FHA loan of 3.5% before they consider buying a home, but there is one great option if this is not possible.  A gift from a family member is that other possibility.  FHA allows an outright gift of the down payment investment to come from someone with a clearly defined and documented interest in the borrower.  This gives the potential borrower a second option for the down payment. Do not be afraid to talk with your family members and make them aware of all of the advantages of buying now, including that juicy $8000 credit.  Perhaps they can assist you in getting in the housing market while the getting is good.

2.   Closing costs- When you purchase a home, there are a number of costs other than the down payment associated with the lender and the Title Company, as well as reserves that need to be paid upfront.  Not only can you use your own funds or gift funds as mentioned above, but you can also have the seller to pay for up to 6% of these costs in an FHA loan.  For example, if there were $10,000 in costs associated with a $190,000 sales price, perhaps you can agree to pay $200,000 for the home and have the seller cover the closing costs.  This in effect rolls the costs into your loan and the seller is still paid what they are looking for in the transaction.  Even better yet, maybe you are in a position where you can just negotiate part or all of the costs with the seller without raising the sales price.  Either way, this is a great option offered by FHA to assist potential home buyers.

     The bottom line here is yes there are definitely costs associated with taking advantage of the $8000 tax credit and the declining housing market, BUT there are ways to work things so that you have as little as possible coming out of your own pocket in these trying economic times.

 

 

Comments (1)

Catherine Chaudemanche - Edison & Central NJ
Metuchen Keller Williams Elite Realty / Middlesex County, NJ - Edison, NJ
Full Time, Informed and Involved- Results Driven

Yes, it takes much more work but it is possible for buyers to buy a home for almost zero cash out of pocket, between programs, grants, incentives, seller's concessions... Cathy Chaudemanche

Jul 08, 2009 04:45 AM