Barbara Sondgerath

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Working hard to make it easy for you!

by Barbara Sabella, from Buying, Selling, and Owning Your Home

Introduction
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Are you a window shopper in the housing market?  Is coming up with a down payment keeping you from taking the plunge?  Is securing financing holding you back?  Or do you think you  can't afford a place comparable to what you are renting now?

The real barrier is fear, according to Linda Leiker, a successful real estate agent in Northern Virginia.  "I've sold a number of homes to single people and young couples just starting out, and the thing that makes them hold back at first is the fear of making that big decision  about such a big outlay of money."

But there are many houses out there today, and they come in every price range.   Interest rates are competitive, as well as price tags.  So, if you've even toyed with the idea of homeownership,  the time is right.

A lot of people who think they have to make a 20-percent down payment never go near the door of a real estate office.  Some others often don't know how much they have to put down.

"Around here," says Leiker, "we fight the problem of 'no money down' advertising.  In most instances, the lowest down payment you can make with a conventional loan is 5 percent, but there are ways to reduce even that figure."

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The U.S. Department of Housing and Urban Develpment (HUD) sells foreclosed homes, usually  below market value, for very little money down, and may even pick up the closing costs for the buyer.  There are no income or asset restrictions on buyers beyond their ability to obtain indpendent financing.  HUD homes are sold through licensed brokers.

Another approach for people with incomes that qualify them to carry a mortgage, but who don't have much of a down payment, is to apply for loans backed by the U.S. govenment. (See Getting the Mortgage.)

Linda Leiker suggests that buyers ask their real estate agents about state programs, too.  "We have lots of people who are qualified as far as income goes," says  Leiker, "but they don't have the upfront cash."  An agent may have helpful suggestions such as gift  letters from relatives.  Family members who can't afford to give money may be able to lend it for a limited time against a projected income tax refund or other future funds of the buyer.

Another option may be to borrow against pension or life insurance funds.  Talk to a tax advisor about this course.

In addition, some employers offer grants, loans,and mortgage guarantees sponsored by the Federal National Mortgage Association (FNMA, call "Fannie Mae") to their employees in good standing.

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 Delayed settlements are a consideration, too.  The buyer and seller write a contract to settle by a future date.  Meanwhile, the buyer moves in right away and pays rent plus an additional monthly sum that goes into an escrow account and accrues toward a down pament and closing costs.

The iffy buyer well may be afraid of the big monthly carrying costs of buying a home:  mortgage principal, interst, real estate taxes, and insurance (PITI).  A tax expert can show buyers how to claim extra deductions and legally hold onto more money every month instead of waiting until the end of the year to get it back.  Individual circumstances vary and different state laws affect federal income  tax returns, so would-be buyers are urged to consult their own tax expert.