Use Your Tax Refund to Grow Your Down Payment

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Are you facing a bump on the road to buying your own home? You really want to buy a house or a condo. Your rent is going up faster than your paycheck and you want to invest in your future instead of your land lord’s. But coming up with a down payment is a big obstacle.  Do you feel like you’ve hit a road block?

You’re not alone. The number one problem cited by first-time homebuyers is the difficulty they have saving for a down payment on a new home. With tax season upon us, now is the perfect time to augment your down payment with your tax return.

Having just a 3% down payment is enough to qualify you for a mortgage. Really. That means you would need $3,000 down for a $100,000 home. According to the real estate website, Trulia, the average home sale price in the Dayton area between September 15th and December 15th, was $119,905. You could buy that average priced Dayton home with just $3,600 down. Of course, the more you can put down, the better off you will be in the long run. Higher down payments can lead to better interest rates and potentially avoiding Private Mortgage Insurance (PMI). Both of these would save you many thousands of dollars over the length of the loan.

Now, let’s get back to your tax return. According to the IRS, the average tax return in the spring of 2015 was $2,800. That would make up a serious chunk of your down payment. Of course, not everyone is getting a tax return of that magnitude. However, if you are planning to buy in the next few years, you have time on your side. Only getting a few hundred dollars back from the government this year? Put that money into a separate savings account. Add more to the account every month along with future windfalls, and your down payment will grow quickly.

Before you spend your tax return on something else, ask yourself what are your priorities? Would you rather grow your down payment or buy a new flat screen TV? If your priority is to buy a new home, then take the road towards homeownership; use your tax refund to grow your down payment fund.

Having Enough for a Down Payment May Not Be Your Only Obstacle.

If you’ve been struggling to put together a down payment, you might need to take a closer look at your finances to determine if you really are ready to buy a home. Your new house payment could very well be much lower than your monthly rent. However, a new home also comes with other expenses like homeowner’s insurance, taxes, and home maintenance. It’s wise to go into your new home with an emergency savings that you can use to make unexpected repairs. For instance, when your furnace breaks down, you have to pay for the repairs on your own.

If you want to know if you are ready to buy a home of your own or want someone to review your finances, contact the HomeOwnership Center and we’ll give you our expert advice.

 

Give the Gift of Expert Advice this Holiday Season with a Homebuyer Gift Certificate

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We all know someone that wants to start looking for their first home. For first-time homebuyers, the entire process is intimidating. There are a lot of questions that buyers want to ask, but there is not always an expert at hand to give the answers they need. Buying a home is one of those times when it pays to bring in the experts. The Home Ownership Center’s First-Time Homebuyer Program will give someone you know the information they need to make the right choices when buying their first home.

Give your loved ones a gift certificate for our First-Time Homebuyer program.

They will be empowered to buy their first home with knowledge and confidence.

Give a Homebuyer Gift Certificate!

Do You Really Need a 20% Down Payment to Buy a Home?

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Conventional wisdom says that you need a 15 or 20 percent down payment to buy a home; otherwise you won’t be approved for a mortgage.  That may have been true twenty years ago, but times have changed and so have the down payment requirements for buying a home. If the hurdle of saving for a big down payment has been keeping you from buying a home of your own, read on and you may find that homeownership is within your reach.

If you don’t need a 20% down payment, how much money should you have? You could get a conventional loan with as little as 3% down. FHA loans are also available with a 3.5% down payment. There are even some specialty programs like VA loans and Rural Development loans from the USDA that don’t require a down payment at all. The take away is that you can buy a home with a much smaller down payment than you might have thought.

For those of you that are paying high rents or student loans, coming up with any down payment at all might be a real struggle. To meet your needs, down payment assistance programs are available in much of the greater Dayton area. These programs do have income limits, but will require you to come out of pocket with very little money of your own.

What about closing costs?

Closing costs are the amount of cash that you will need to pay for closing expenses such as loan processing,  the land surveyor, deed recording, etc. Typical closing costs run in the 2-5% range and are not a set percentage, but the actual cost of the various fees. Unlike the down payment, closing costs don’t have to come from you. You could ask for a credit towards closing costs from the seller or get a cash gift from family or friends. You may even be able to add the closing costs into the mortgage.

Don’t let the lack of a down payment become a barrier to buying a home.

The 20% down payment requirement is the biggest homebuying misconception that we hear at the Home Ownership Center. It’s simply not true. If you have questions about down payments or any other homebuying issues, give us a call at 937.853.1600 or fill out the following form. We are a non-profit resource dedicated to guiding you down the smart path to homeownership.

 

5 Steps to Choosing the Right Neighborhood for Your First Home

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Your career is going well, you are financially stable, and you are tired of renting. Sounds like the perfect time to buy your first home. After deciding what you want in a new home and what you can afford to pay, you need to determine where you are going to buy. You might already have a good idea of the area in which you would like to live, but it’s still smart to step through the process of evaluating a few neighborhoods. Let’s step through the process of choosing the right neighborhood for your first home.

Step One: Know What You Want in a Neighborhood

What exactly are you looking for in a neighborhood? Is quiet and sleepy what you desire or is an area that is packed full of excitement more to your liking? Do you need access to public transportation? Take the time to make a list of what is important to you and your family. Be sure to get input from your spouse and to consider your children now and in the future. Be sure to prioritize your list so that you know the areas in which you can compromise and those that are not flexible. Use your list as a measurement tool when you start evaluating neighborhoods.

Step Two: Look at the Map

Pinpoint your work location on the map and decide how far you are willing to drive or ride to and from your job every day. Draw a circle around your work, using your maximum commute as the radius. The area inside of the circle is where you should begin your search. Your search area may be narrowed further by other factors like the need to live near public transportation, the interstate, extended family, or other locations that are important to you.

Step Three: Do Your Homework

Now is the time to refine your list of potential neighborhoods even further. Here are some ways you can carry on your research:

  • Ask around and get other people’s opinions on the areas. You are likely to find friends, family, and co-workers that are very familiar with the neighborhoods you are considering. If possible, talk to potential neighbors.
  • Look in your local paper for community news, and cultural events.
  • Look for local parks and entertainment facilities as well as restaurants, grocery stores, and libraries.
  • Does the area have the items on your family’s list of wants?
  • Get information on the quality of the school system as well as private or parochial schools in the area.
  • Determine if the home prices in the area will fit your target price and budget.

Step Four: Visit the Neighborhood

There is nothing as effective in determining if a neighborhood will be right for you, as actually driving through the area. Here are some things to take note of:

  • Look at the local schools. Would your children need to walk to school or ride a bus? Are the school buildings and grounds well maintained? Not planning on having children? The quality of the local school system will be a big factor in determining the local property values.
  • Visit the neighborhood at different times of the day. You will know if the streets are well lit at night or if traffic is an issue during rush hour. You will see if families and kids spend time in their yards. You will get a good idea of the curb appeal of the homes and whether or not they are being maintained properly.
  • Your first impression counts. Did you like the look and feel of the area?
  • Consider what your lifestyle in the neighborhood would look like. Will you be able to walk your dog? Will the neighborhood be quiet and relaxing or full of energy and entertainment? Your neighborhood should be able to provide you with the lifestyle that you are looking for.
  • Is the neighborhood hip? Why would you care? Young families are the ones determining the next great place to live. They will want cool coffee shops and restaurants. They will want art galleries and musical venues. They will want affordable neighborhoods that are on their way up. If your wants align with theirs, then find the neighborhoods they are moving into.

Step Five: Find your home

Once you’ve found your neighborhood, you can start your home search with the confidence of knowing that you will be happy living in the area. Now is the time to engage a real estate agent to help you with your search.  However, don’t forget to look at local homes for sale in the paper and online. Use the same amount of care in looking for your home as you put into finding the perfect neighborhood and you can’t go wrong.

Bonus Step: Engage an Expert Advisor

If you are buying your first home, you should consider seeking the assistance of an expert on the homebuying process.  Your new home is likely to be the largest investment that you ever make. A non-profit partner, like the HomeOwnership Center of Greater Dayton, will guide you every step of the way. Their experience and advice can prevent you from making common mistakes and empower you to make solid homebuying decisions.

Find out more by calling 937.853.1600 or visiting our Homebuyers page.

The 2015 National Housing Survey Results Have Been Released

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As a charter member of NeighborWorks America, the HomeOwnership Center of Greater Dayton has access to many tools, surveys, and sources of information that are all designed to guide homebuyers down the smart path to homeownership. One powerful source of information is the 2015  National Housing Survey. What can this year’s survey tell us about current trends in homebuying? Here are some highlights:

28% of adults say they know someone that did not buy a home because of their student debt.Student debt is having an impact on the ability of many people to buy a home of their own. 
Is your student debt load getting the way of buying your first home? If so, you are not alone as 28% of Americans know someone that has delayed the purchase of a home because of student debt. Additionally, 57% of respondents with student debt indicate that their student loans have become an obstacle to buying a home.

In spite of the difficulties faced when buying a home, most adults don’t use a housing counselor.
Even though 70% of adults agree that the homebuying process is complicated, two thirds of them don’t consider using a housing counselor to guide them through the process. Indeed, 42% rely on friends and family to learn about buying a home. Unfortunately, the options available to new homebuyers have changed significantly and turning to friends and family may not give you the information you need to buy your home with confidence.

Many people have little to no information on down payment assistance programs.
In the Dayton area, down payment assistance programs are available for the cities of Dayton and Kettering, as well as Montgomery County. If you are a first-time homebuyer, you are doing yourself a disservice by not looking into the programs and determining if you qualify. You can start by reading about the programs here.

To read the complete results of the third annual national housing survey, visit NeighborWorks America’s web page.

How can the HomeOwnership Center’s advisors guide you through the home buying process from beginning to end?
Not everything is doom and gloom. The survey shows that owning their own home is still a goal for most adults. Your smartest first step just might be contacting a non-profit partner, like the HomeOwnership Center of Greater Dayton. Our experienced advisors will guide you every step of the way. Their experience and advice can prevent you from making common mistakes and empower you to make solid homebuying decisions.Find out more by calling 937.853.1600 or visiting our Homebuyers page.