It still amazes me how so many capable individuals and families continue to rent and provide all their benefits to their landlords (appreciation, tax deductions and building future equity/wealth).
Is it that they are just plain lazy or maybe they haven’t strategized how to accomplish purchasing? There are several ways (even if you have student debt) to secure your down payment.
The first step, assuming you have parents or any relatives, is to get a gift from them, which doesn’t count against your debt to income ratio or even as income (up to the allowable gift limit of $14,000 per child per year in 2019).
Then you can also borrow money out of your 401K or any retirement plan (ask your administrator of your plan and/or your CPA for advice) for your first primary residence (or college or medical reasons) without any penalty. You should also calculate what you can add to the down payment and total it up.
Also, realize there are loans upwards of 97 percent that can be provided (not for co-ops and most condos) for homes, assuming you have all the paperwork from your lender saying that you are qualified based on checking your total income, debt/income ratio, credit, job status, etc.
I also mentioned many months ago in one of my columns that all the counties provide grants that you do not have to pay back if you reside in the home for at least 10 years; it’s called “free money.” There may be a waiting list, but you can call each county to find out on to apply: Here are two links that will assist you:
My mortgage person actually was able to get a 3 percent down and 97 percent loan for one of my customers without any grant money.
However, finding a home within your price point and budget is always the challenge to make the numbers work and enable the seller to feel comfortable going with you. Unfortunately, there are still cash buyers, although not as many as in past years as well as those who have larger down payments, making the sellers consider taking those individuals and families as a safer path to take. But there are towns in Nassau and Suffolk where homeowners would consider a low down payment situation.
The longer the home is on the market the greater the opportunity for those types of transactions to work. As we go into the fall and winter months, where some homes are still not selling due to pricing and other issues, that can be an excellent time to seek out those sellers that just might go with your minimum three percent to five percent out of pocket down payment.
It may take some time to locate such a home with a negotiable seller, but they are out there. It sure beats renting, right?
There is always that certain comforting and secure feeling of ownership, that now puts you into the position of being your own landlord and finally having control over your life and gain all the benefits that you were giving away! Wouldn’t that be amazing transition to being an owner, even though you might have thought that you wouldn’t qualify?
Yes, there is some groundwork to be done, but nothing is usually on a silver platter unless you are very fortunate and are in the right place at the right time (it’s called timing, not luck!).
If staying on Long Island for the long run is your goal, then thinking outside the box is crucial to figuring a plan in accomplishing this most challenging task. I understand how the price of homes has escalated over the last eleven years since the implosion of the market in 2008. But saving and scrimping every penny, as needed, is the sacrifice one must make in order to stay local to be among family and friends.
I am quite sure relocating out of state as many have been contemplating and actually doing is not necessarily what people want to do. But making that decision is mainly for economic and quality of life reasons.
Having your children and grandchildren reside locally is a huge benefit psychologically and physically, especially as we grow older. When you need help someone is there! Luckily my children are local, so when they need our help, we are close by.
Just this morning, my daughter’s nanny locked her house keys in my daughter’s home, where she and her husband were at work in New York and obviously couldn’t leave to come back home to open). My wife went over to enable her to get back in.
So parents and grandparents, if you can assist your children to stay in New York, help them out, and it will be a win/win situation. This way we can stem the tide of losing our most valuable asset, the younger generation!
Philip A. Raices is the owner/Broker of Turn Key Real Estate at 3 Grace Ave Suite 180 Great Neck. He has earned designations as a Graduate of the Realtor Institute and a Certified International Property Specialist. (516) 647-4289