Ok, as I work on this post, it is a snowy day in Cheltenham Pa, rather Philadelphia and Pennsylvania. Typically, Real Estate sales slow during this time, and as there are a lot of homes to buy, those that might buy them are reluctant to take the leap. The truth is that during the winter is the PERFECT time for those savy buyers that are tired of renting or that are ready to leapfrog into their “forever home”.
Example: Before the new year I had clients that closed on their “forever home” that sat for A WHILE and as they waited, the price for this diamond in a rough dropped from over $550,000 to close escrow on it for under $475,000. This property in a well sought after Montgomery County School District area (Abington) was over 4,500 square feet with over 6 bedrooms, 4 bathrooms, elevator and for that appraised for $100,00 more than their purchase price BEFORE ANY REPAIRS. They chose a renovation loan and I am confident some time by March, they will be the owners of a home worth more that a quarter of a million dollars.
Keep in mind, they saved almost $100,00 dollar on the sale, then will gain over $300,00 in equity once renovated. NOTE: this is NOT an Flip, this is their home for the next 30-40-50 years.
I have several more recent examples of first time home buyers and investors that made out during the “lean months” of the Winter. Investors ALWAYS have known that this is the best time to pick up investments for their portfolios. The pick it up, renovated it and are done and read to sell by Spring.
Now this post is NOT about WHY YOU SHOULD BY NOW, but more on HOW YOU CAN BUY NOW.
OK What is your biggest “HURDLE” to not buying your home in the next 2 month?
Many people understand that currently in nearly all states and metropolitan areas, to rent a home is more expensive than to purchase one. The difference can range from just about $200 to on occasion $700-$800 dollars. They do not WANT to pay to live in someone else’s property for many, many reasons (rules, landlords, privacy, personalizing, etc.) but the main reason is that they would love to make a smaller mortgage payment rather than a larger rental/ lease payment BUT the DOWNPAYMENT is the stumbling block. “Who has that cash right now to put down on the property?” or “I am not currently able to save to accumulate the down payment.”
Well, you may have access to money you were not aware of BUT also there are many, programs (especially in Philadelphia and Pennsylvania).
Money that is yours
Did you know that many of your retirement accounts like 401K, 403b and many IRA’s will allow you to borrow from your account or even withdrawal without penalty for the purchase of a home. Contact your HR person to inquire more. I actually purchased my first investment property using money from my 401K.
Money from Others (OPM or Other People’s Money)
This is the LARGEST POOL OF MONEY you may be able to get for your down payment. The first place is the many programs that offer grants for NOT ONLY first time home buyers but for many other including disabilities or farmer.
Currently Pennsylvania has several programs including The Keystone Advantage Program:
The Keystone Advantage Assistance Loan Program provides a second mortgage loan to help with the costs associated with the purchase of a home. Qualified borrowers can receive up to four percent (4%) of the purchase price or market value or $6,000 (whichever is less) in down payment and closing cost assistance to be repaid monthly. The assistance loan will be amortized over a ten year term at zero percent (0%) interest.
The Keystone Advantage Assistance can be used in conjunction with the following
PHFA first mortgage home purchase loan programs:
Below is a link to download the Participating Lenders
The HSN Website has several other programs you can check out (link below):
This concept in new to many who have never purchased or sold a home but is a VITAL tool that Real Estate Agents use to help their buyer afford homes. **NOTE: If you agent does not suggest or discuss Seller’s Assist with you as you are buying a home, ask they why not and then possibly find another agent, SERIOUSLY.** Seller’s Assist is when the Seller gives back money to the Buyer (on paper) to help with the down payment. This is a transactional arrangement where not actual money is transferred, it is just “adjusted” at closing (the buyer gets credit for an amount and the seller’s proceeds are deducted that same amount).
Now many if not ALL the programs and options mentioned can be combined and blended. For example, you can get a grant as well as seller’s assist AND use 401k money to purchase your home. All this could have you providing only minimal amount of money that was from any paycheck or income.
… To Be Continued
Next Blog will touch on another reason why people choose not to buy.
Check back next week…
In the mean time, stay warm, stay focused on your dreams and stay caring about others.