Every year, many individuals are looking to become homeowners for the first time. Except there are some hurdles first time homebuyers must go through that are preventing them from completing the big purchase. According to a 2020 poll by NerdWallet, a personal finance company, stated 37% of potential buyers do not have enough money for a down payment. 42% claim their income is too low.
Credit Card
Yes, you can use your credit card as a down payment for a home but it's not what you think. Every credit card has a cash advance credit line you can use for emergencies. The catch is you'll have to pay more in interest when the bill is due. You can withdrawal the funds from the ATM or have it deposited to your checking account. For example, let's say you have a credit card limit of $7,500 and your cash advance limit is $3,500. You can withdrawal the entire $3,500 with no questions ask. The interest will be higher than your typical payment. Usually between 15%-30%. In this example we'll say 24%. That's $840 in interest. Borrow wisely.
Down Payment Assistance Programs
There's thousands of programs available to first time homebuyers that can pay for either down payment or closing costs. In Florida, there's one program called The Florida Assist program which pays up to $7,500 in down payment assistance. Homebuyers can get up to $50,000 if you meet the requirements and credit scores are not involved. Most importantly, you'll have to maintain certain conditions with these programs and failure to do so will result paying them back.
Success Story: A few years ago, Yolanda Rambert-Marshall of Jersey City, N.J., was able to qualify for the Neighbor Next Door Homeownership Program. They gave her $27,000 for a down payment on her home according to My Mortgage Insider
Parents or Relatives
This may not be an option for many first time homebuyers but family members can be helpful and either gift or lend you funds. I've heard stories where parents gift their children $10,000 or more to complete the purchase of a home.
Remember: You do not have to put 20% down on a house (Depending on the lender). Most lenders will take 3% or more.
INVEST
Investing is another quick way to make some income through trading options or patiently waiting for a stock to skyrocket. This is only for the investors who know what they are doing. Investors can make up to $50,000 a day or more but for the simplest and safest investments intermediate investors can make up to $20,000 in a month or two. That really depends on you and your risk tolerance.
SPEND LESS
You must minimize your monthly expenses if you want come up with down payment funds. Sacrifice for a few months to a year and suspend dining out, shopping, and anything that involves spending unnecessary amounts of money.
SIDE HUSTLE
We're all good at something and many individuals contain hidden talents. Starting a side hustle can make any hard worker up to $50,000 a year or more. Doing hair & nails, resumes, selling items or clothes, DoorDash, offer services, create online course, cook or clean, garage sales, mystery shopping, and many more. Options are endless.
401K
You can use your 401K tax free for a down payment on a house. It would be considered a hardship withdrawal but that's up to the IRS if buying a home is an urgent purchase. Another fact, you'll pay income taxes on it but so what? That's next year and there will also be an early withdrawal limit (10%). So, if you made $50,000 and took $10,000 from your 401K then you made $60,000 for that year. Bright side is the entire amount doesn't have to be repaid.
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