Hurlbuthomes.com Blog

WHAT? I need money to buy a home!? What's that all about!? What happened to all those zero down interest only 80/20 arm and a leg thingies?

Yes, it's true, in most cases today you'll actually have to put some of your hard earned money down to actually purchase your new home. But it's not as bad as you might think. There ARE a few simple strategies you can employ that are painless and will have you into your new home in no time.

First let's talk about zero down loans and get that out of the way, because I know you'd really rather NOT put money down if you don't have to.

OK, here are the few (and I mean FEW) situations where you won't have to put money down:

• VA Loan - Available to all current and former military members. Government loan, 15 or 30 year fixed rate, competitive rates. Not available to anyone that's not current or former military.
• USDA Loan - Available to anyone. Very similar to FHA loan in terms of home requirements, etc. BUT limited to rural areas. Income guidlines apply.
• Pierce County Downpayment Assistance - Provides up to 6% of the purchase price of the home to be used towards down payment and closing costs. The 6% is financed as a 30 year 2nd mortgage at 1% interest rate with NO payments due until the home is sold. Income guidelines apply.
• Tacoma & Lakewood Downpayment Assistance - Similar to program above, but no interest loans for 20 years instead of 30 years. Income guidelines apply.

Now that we have that out of the way, let's talk about actually putting money down.

You can get into an FHA loan for as little as 3.5% of the purchase price put down. So when you look at say a $300,000 home you can get in for as little as $10,500 out of pocket. Which, when you think about it is really a screaming deal. You're leveraging 96.5% of a home's value using someone else's money to get into YOUR home! AND the best part is that the 3.5% CAN be gifted from a parent, rich uncle, etc. So again, you can get in with zero down. Now keep in mind that an FHA loan with only 3.5% down will carry with it, Private Mortgage Insurance (PMI) but that's a small price to pay to get into the home you want. AND if you qualify for the first time home buyer tax credit, you get $8,000 of that down payment back when you do your 2009 taxes. It's almost like zero down.

How do you save that 3.5% when you're living paycheck to paycheck already you might ask? Well it requires discipline. As Arnold Schwarzenegger said in Kindergarten Cop "You Lack Discipline!" Buying a home will be one of the largest, if not THE largest financial commitments you'll make. If you're not disciplined before you buy your home, you'll likely not be disciplined after you buy your home, so you may find yourself in a scary situation should something drastic like a roof leak pop up.

But you didn't come here for a lecture on discipline did you? Some easy things you can do that are fairly painless to do could be:

• Make your coffee at home, instead of hitting up Starbucks every morning.
• Take your lunch instead of eating out.
• Set aside 10% of your paycheck every payday into a "down payment" fund. Pay yourself first and you'll soon not even miss the money.
• Detail all your expenses for one month, down to the penny. You'll be surprised at what you're spending (wasting) money on.

These are just a few tips to get you on the road to home ownership. I'm full of them. If you want more, simply give me a call or drop me a line. I'd be happy to review your individual situation and help you find ways to save for that downpayment. In no time, I'll be handing you the keys to your brand new home! Now isn't that worth not having your coffee come in a cup with a green woman on it?