5 Ways to Find Extra Money for a Down Payment

Here's how to find money for a down payment.

In order to buy a home, you need to have a balance of good credit, manageable debt, stable income, and sufficient savings. Maintaining a balance between these four categories is challenging enough on its own, never mind coming up with enough cash to close on your potential new home.

If you’re worried about the credit part, you can see what you can potentially do to improve by viewing your free credit report summary, updated every 14 days, on Credit.com. And, if cash flow is your issue, here are some ways you can find extra money for a down payment.

1. Move in With Family

Having a nearby family member that will let you move in for a little while is a great way to save money on rent. It’s nice to live alone, but saving that $2,500 per month is a financial home run. In exchange for a little less privacy, you can start saving big money in a shorter amount of time than you would have by continuing to pay $2,500 per month. This can yield huge dividends for you in the future and could be the means of collecting the down payment for your new home.

2. Retirement Funds

Did you know that some retirement accounts let you draw from your reserves early in order to pay for your first home? Every retirement account is different, so it is a good idea to contact your human resources department to review your 401K, or a bank/financial adviser to review the terms of withdrawal from your investment account. In most cases, if it is a first home (i.e., you have not owned a home in the last three years), you can borrow from yourself to finance your down payment or cash to close. There can be tax penalties for withdrawing early, so be sure to review your terms.

3. Cash-Out Refinance

If you already own a home, it might be worth considering a cash-out refinance on your current home in order to pay for another one. Fannie Mae and Freddie Mac have recently taken kindly to this approach by changing the equity position in a departure residence to purchase a new primary home. Completing a cash-out refinance on your current home to purchase another is a form of leveraged debt and will allow you to purchase with a stronger offer. Just be sure this makes sense for your finances before you apply.

4. Sell a Home

In a similar scenario, by already owning a home with equity, you can sell your home in order to buy another one. For example, if you have $150,000 of equity in your current home, you can sell and use that equity as a down payment to acquire another. The challenging aspect of this is that these scenarios are contingent upon one house selling. If the buyer backs out of the deal, your ability to secure the house you are in contract for will be at risk.

This method should be approached with caution and only with a real estate agent who can walk you through the ins and outs. Education is key to a successful dual transaction like this.

5. Sell Personal Property

As much as we like our things, it is nice to have a roof over our heads we can call our own. If you have any toys or big-ticket items like a boat, motorcycle or novelty, those can be sold to generate cash for buying a home. In order to use these funds, you need to keep all documentation while selling the item. If you do not have supporting documentation, the cash cannot be used.

If you are looking to see what it takes to buy a home, we recommend talking to an experienced licensed mortgage professional. If you do not have the necessary means to acquire cash quickly or efficiently, talk to your mortgage professional about programs that require little to no down payments or lenders who have down payment assistance available. And, of course, be sure to determine how much home you can comfortably afford (more on how to do that here).

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4 Inexpensive Ways to Boost Your Home’s Value

If you’re planning to sell your home, you’re likely looking for ways to boost its value. The more money you can make from your home’s sale, the better. However, you may have been hesitant to perform some much-needed upgrades due to the cost. Fortunately, there are some adjustments you can make to your home that won’t break the bank. Here are some money-saving tips that will bolster your home’s value in no time.

1. Break Out the Paint

A quick, inexpensive way to increase the value of your house is to paint. A fresh coat of paint can make rooms look like new. But don’t get too wild when choosing paint colors. Your best bet is to stick to neutral shades because they will appeal to a greater number of potential buyers. However, not just any neutral shade will do. A Zillow study found that it’s best to steer away from colors such as dark brown and terra cotta when it comes to interior paint colors. If you do choose to use these colors for the interior, your home’s price might sell for $469 (when using dark brown) or $793 less (when using terra cotta) than Zillow’s price estimate. Homebuyers generally don’t care for these colors.

2. Upgrade Appliances

Know that you don’t have to go out and buy all new appliances that match exactly (and if you’re working with a tight budget, this isn’t a great idea, anyway). The experts at Kitchen.com say it’s OK if your appliances don’t perfectly match, as long as they don’t compete.

If you’re up for bucking the norm, white and stainless steel are both neutral colors, so you don’t have to worry about them clashing. What you should keep in mind is that when one appliance doesn’t match the others, it stands out. You can use this to your advantage and create a strong focal point: Designers often do this with the cooking area by choosing a gourmet range or artistic hood with a different style, color or finish.

3. Change Door Knobs

When it’s time to put your home on the market, details matter. One detail that often goes unnoticed is door knobs. You can add a bit of flair by replacing old doorknobs around your home and on kitchen cabinets. The best part is, a simple door knob upgrade doesn’t have to cost a fortune. Home renovation expert Brittany Cramer said one thing you should keep in mind when updating door knobs is the home’s era. “One of my favorite pieces of advice to give folks is to consider the era of the home before purchasing and installing accessories. You might be a lover of that wrought iron, Tuscan look, but will that style suit your home?” said Cramer.

4. Replace Light Fixtures

Another inexpensive DIY project is to replace home lighting. Updated light fixtures can give any home a lift. The right light fixture can make your home look not only brighter but also modern. In addition, consider replacing outlet switch plates.

[Editor’s note: Chances are if you’re selling a home, you’re also buying one. Check out our tips on how to secure the best mortgage for you.]

This article originally appeared on The Cheat Sheet.  

 

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Woman Buys Nashville House, But the Seller Won’t Leave

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When you buy a home, you expect to move into it. Seems pretty straight forward, right? Well, things don’t appear to be working out that way for one Nashville woman.

Tamara Holloway closed on her house on June 1 but the seller, Justin McCrory, won’t vacate the property, according to News 2. McCrory told a reporter for the Nashville station that he’s lived on the property for four years and that he “technically [doesn’t] have to go anywhere.”

“The transaction went through. They’re getting a good clean property. What’s the problem?” he reportedly said.

Signature Title Services reported the closing processor sent an email to McCrory telling him to vacate the property. Holloway also filed a detainer warrant, the first step in the eviction process, to get McCrory out of her house, the station said.

“It’s been a nightmare,” Holloway told News 2.

It is possible to put an amendment in the closing papers saying a former tenant could stay in a home past a closing date, but there reportedly isn’t one in Holloway and McCrory’s case.

Grover Collins, a real estate attorney with Collins Law Firm in Nashville, is helping Holloway pro bono and told News 2 that it could take up to another 30 days before McCrory is out of the home for good. 

Buying Your Home

If you’re in the process of buying a home, or plan to do so in the future, it’s in your best interest to get the keys when you close on the house (something Holloway didn’t do) to help prevent this type of thing from happening. Denise Creswell, the president of the Greater Nashville Association of Realtors told News 2 that getting the keys at closing is particularly important if the seller isn’t working with a realtor. McCrory, for example, did not have one — the transaction was a sale by owner.

Creswell also told the station that buyers should not “panic or rush” into any purchases, given how hot the Nashville real estate market is.

As you’re searching for your home and the mortgage that will help you move into your dream house (assuming the seller vacates the property when they’re supposed to, of course), it’s a good idea to know where your credit stands. (You can view your credit reports for free each year at AnnualCreditReport.com and see your credit score for free, updated each month, on Credit.com.) Your credit is an important factor in what mortgage rates you’ll qualify for and even how much house you can afford. And if your score isn’t quite where it should be to get you the best deal, there are steps you can take to help improve it, like paying down credit card debt and disputing any errors you may find on your credit reports.

[Offer: If you need help fixing errors on your credit report, Lexington Law could help you meet your goals. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

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Woman Wears Panda Suit in Real Estate Pictures to Get Home Sold

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A lot of time and paperwork goes into selling a home. So when Jessica Arnett, co-owner of Villa Real Estate in Texas, decided to draw more eyes to a listing, let’s just say she went above and beyond.

Arnett, who’s based in Houston, was fed up with the lack of traffic to one listing in the nearby suburb of Spring. The home, located at 22427 High Point Pines Dr., had been on the market for three weeks, she told the Houston Chronicle, and in that time, it had only received two showings.

Oddly enough, the seller told Arnett that he’d heard of a guy in Canada who posed in a panda costume for the listing photos. The gimmick apparently worked, so she decided to do the same thing.

Within a day of the new listing going up, she received several requests for showings and “tons of calls” from fellow Realtors who approved of the tactic, the Chronicle reported.

“Realtors asked me where I got the panda costume,” Arnett told the paper. “I said, ‘Don’t steal my idea!'”

realtor-dresses-as-panda

If buying a home is in your future, make sure you know where your credit stands, as this will help determine what kind of mortgage and terms you may qualify for. (You can read more about why you should check your credit before trying to buy a home here.) Once you’ve studied up, you can view two of your credit scores, updated each month, for free on Credit.com.

Credit not up to snuff? You may able to improve your score by paying down debt, disputing any errors you find on your credit report with the appropriate credit reporting agency and limiting any inquiries for new credit until your score has bounced back.

[Offer: Denied from a loan? It may be because of a low credit score due to errors on your report. Lexington Law can help you navigate the credit repair process so you can get back on track. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

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The Trick That Can Help You Sell Your Home Faster

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In some areas of the country, it’s a sellers’ market, but if you’re not so lucky and you need a competitive edge, you might consider offering buyer incentives, which can work in a couple of different ways depending on the homebuyer’s financing.

We tapped a couple of experts to explain how this might look in practice, and here’s what they said.

Mortgage Deals

Mortgage lenders tend to be finicky about seller concessions, says Heather McRae, a senior loan officer at Chicago Financial Services. Concessions can be limited to certain percentages based on the buyer’s down payment, and the lender will want to see how it’s phrased in the contract to ensure only one incentive is provided. The incentive itself must go toward closing costs or prepaid items.

“You can’t have a seller giving you $10,000 to put a new carpet in,” McRae said, by way of example.

Among the closing costs — incentives buyers can offer are funds to cover a bank’s origination fee, a title company fee or a transfer tax from the city or county (most counties charge a recording fee to record the mortgage, McRae explains).

For prepaid items, sellers can offer a credit for, say, the buyers’ nonrecurring closing costs, i.e. those payments paid on a one-time basis at closing, like loan origination fees. Just keep in mind lenders have restrictions on how much sellers can credit to buyers at closing, and amounts tend to vary by lender.

Cash Deals

With cash deals, sellers can offer whatever incentives they want, although, as Mark Keppy, a real estate broker also based in Chicago, pointed out, “there’s not a lot that buyers really desire in this market, they’re just trying to secure the property.”

Often, sellers choose to offer a home warranty, Keppy said, although the “best thing is for sellers to be more flexible on timing and close quicker.” Coming down on price doesn’t hurt either, he added.

Looking to Buy?

If you’re selling your house and looking to buy a new one, it’s a good idea to make sure your credit score‘s in tip-top shape before you start house hunting, in addition to figuring out your budget. (You can see how much house you can buy using this free calculator.) Your credit score can determine not only whether you can get a mortgage, but what percentage rate you’ll pay. You can view your credit scores for free, updated each month, on Credit.com.

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The Thing That Can Add $5K of Value to Your House

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Becoming a homeowner is still the American Dream for many people. You apply for a 15- or 30-year mortgage and add as many home upgrades and improvements as possible. In addition to hoping it’s a seller’s market when you put the ‘for sale’ in your lawn, those home improvements determine how much profit you stand to make from your investment.

One of the best investments you can make is fireplace installation, according to a recent study from Angie’s List. The company surveyed 100 real estate agents on home values in relation to fireplaces and 2,000 homeowners/homebuyers and found that fireplaces are a pretty hot commodity.

The majority of potential homeowners in the market today see fireplaces as an asset. They top so many homebuyers’ must-have lists and are in such demand, in fact, that fireplaces increase over 76% of homes’ value anywhere from $1,000 to $4,999. The study has one caveat – electric fireplace inserts aren’t nearly as desirable as wood-burning or gas-burning fireplaces.

Without much variation, the wood-burning option was favored by all age demographics. Specifically, of those aged 22-29, 58.82% preferred wood burning, with those aged 30-39 close behind at 57.89%. Meanwhile, those in the 40-49, 50-59 and over 60 age groups favored wood-burning fireplaces at 63.04%, 65.35% and 67.31%, respectively.

Adding a fireplace may add value to your home, but it will come at a price too. If you’re looking to make a home improvement, make sure you understand your financing options. Home equity lines of credit (HELOC), personal loans and/or credit cards are often used to help homeowners with remodels, but they all come with different terms, benefits and pitfalls. For example, a credit card may have a higher interest rate than a HELOC, but if you default on the credit card debt, your home won’t be in jeopardy like it would with the HELOC. No matter which option you pursue, you can check your credit score for free on Credit.com beforehand to see which options and interest rates you’ll qualify for. And if you spot errors on your credit, disputing them can get them fixed quickly.

[Offer: If you’re trying to buy a home and are worried credit report errors are holding you back, you can hire companies – like our partner Lexington Law – to manage the credit repair process for you. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

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