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I am so excited that you have decided to own a home. It can be the best purchase you make in your life. Not only does Uncle Sam approve and most of the time will give you another tax deduction, but when you own a home your rent raises stop forever! The following methods to reduce down payments are not commonly used by real estate agents or loan officers. The reason being that most agents/lenders don’t have these creative sources. They prefer to deal with quick, easy transactions, or they don’t know about anything other than the traditional 3% down and 3% close. This poses a real challenge to the buyer. As an example, a home purchase price of
$100,000 would demand $6000 as a down payment. Even if you had that in cash, wouldn’t it be better to buy with less cash so you would have extra money in case of an emergency? This is the reason I have developed methods to help people that are buying a home to come up with less out of pocket and I will show you how it is done.
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Be ever mindful that I have spent years developing methods to get people into homes, so please don’t just read it. Do it. If you need help I can refer you to professionals in your area who can help you.
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The idea of somebody putting money in your pocket to buy a home is great. Sometimes grants have special stipulations such as you must remain in the home for a certain time period. Sometimes the grant is a gift and sometimes it’s paid back over a period of time (usually at $30 a month). I have seen grant money cover as much as 5% of the sales price leaving the buyer to bring in only 1% of the sales price to own their very own home.
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Sellers when approached (and when it is not a seller’s market) will many times help with the closing costs. Under certain circumstances the seller will agree to donate
closing costs, reducing the buyer’s costs and therefore closing the transaction. Once again that is usually 3%. Usually the underwriter wants the paperwork to reflect that the seller is contributing _____% of the sales price towards the buyers closing costs.
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If you have excellent credit, what you can do is to use a credit card check and deposit it into your bank. It may need to sit there for 3-4 months. This is what is called seasoning. The idea here is you don’t want the underwriter asking where the funds came from. Not that we are trying to be dishonest but it really isn’t anyone’s business if you can show enough seasoning. By the way I bought 2 houses in the same day. They were two different transactions in different areas. Both were
closing at the same time and I used credit cards as funds for down payment and closing.
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Let’s say you got extremely lucky and the seller was willing to pay your closing costs and part of your down payment. If this happens (rarely) then you have another problem. The closing cost can be contributed to you, but the down payment can’t. So the 501c3 charitable trust allows the seller to contribute to the trust and the trust in turn contributes that same portion minus a small fee for moving the money, all completely legal.
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This type of financing is good. To get acceptable rates your credit must be fairly good. It covers all the down payment but you will still need to be creative to get the closing costs down. Be careful using this method as some lenders will not allow a buyer to gain closing costs from any source except their own bank.
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If you use this source then it will be important that you have really good credit. It covers most of the costs including closing costs and down payment. It is a little bit higher in interest but it is not something to be avoided.
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See what you can find out about loans specifically offered to people in your profession.
Some careers have special loans tied to them. Teachers, firemen, police, and health care. All of these have special programs and yet very few people know of them and unfortunately the people that know don’t even try to get financing. They are out there.
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If you would like to learn more from our in-house Credit Expert please take a second to tell us some information about you and your situation.
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