Stop paying rent and OWN your own home
It’s a dream the majority of renters all have - to own their own home and to stop wasting money on rent. If your credit isn't that great or if you haven't been employed for very long, you probably feel that you are doomed to apartment living forever and that there's no way out. Well, I would like to let you know that there are some ways in which you could qualify for a loan and start out on the road to homeownership.  You must be the one to make an effort to force change in your lifestyle BUT there are a few ways in which you can save for a downpayment and stop wasting thousands of dollars in rent money to your landlord. Why on earth would you continue to waste thousands of dollars by throwing it away on rent when you could meet with a real estate agent and find out what other options are available to you?  Of course, everyone has their own specific situation and not everyone will be able to own a home straight away if there are problems, for example, with credit that have to be dealt with.   But there is nothing stopping you from placing homeownership within your sights and working towards it once you have some good advice to set you on the right track.  I recommend that you take a few minutes to discuss your specific needs so that you can stop renting and start owning - it doesn't cost you anything to ask!  A home lender may tell you that he needs to see at least 12 months of on-time credit or auto payments if you've been through a rough time - that's understandable, but at least he has given you a goal and, if you stay in touch and let him know how things are progressing, it is MUCH more likely that you'll qualify for that loan (all things being well) 12 months or so down the line (depending upon lender criteria).

For most of us, gathering together the funds necessary for a home downpayment is a difficult task - making ends meet each month is tough enough.  But when you consider that you have already been meeting your rental obligations every month, if you stay within those same financial boundaries, you should have no problem making the house payment.   In general, most conventional loans are going to require at least 20% of the home purchase price as a downpayment.  How can you accumulate such a lump sum?

1. Get with the program! The first step toward saving enough money for a down payment - your initial investment towards the purchase of your own home - is a psychological one - DESIRE. You (and your spouse or friend) must REALLY want to buy a house. With enough passion for ownership, you'll find yourself motivated to save every penny you can. To boost your desire, spend a weekend looking at houses or condos within what you think is your price range. Saving will be a whole lot easier if you have a vision of a two-bedroom, two-bath house with white shutters on Elm Street! This vision will make it easier to say "no" to shopping sprees, buying a second car or going on an expensive vacation. Take pictures of your favorite properties and tape them to your refrigerator door or better yet, prop them up on your desk next to your checkbook.

2. Review your budget or, if you're budget-free, draw one up. Get help making a budget here. Then list those areas where you can cut back on spending and earmark that money for your special Down Payment Account (DPA). Don't cut out everything that's fun ... you want to enjoy life BH (Before the House), but do start to be more cautious. Here are some savings tips to get you in the right frame of mind. Add your own to the list:

Drive at the speed limit. Traveling at 65 mph versus 55 mph increases fuel consumption by a whopping 20 percent. (GM Motor Club)
Clip coupons. If you save $25 a month with food and drug coupons, that turns into $360 a year.
Take your lunch to work. If you're spending $8 a day on a sandwich, Coke and an ice-cream cone, that's $2,000 a year, assuming two weeks out for vacation. And that's not counting those in-between snacks of chips, pretzels and cappuccino. Figure out what you spend per day on lunch; then on the days you brown bag it, put that amount into your DPA.
Carpool. Or, walk, bike or take the bus to work. Taxis are a guaranteed way to spend $5 in five minutes.
Talk less. Make sure you have the cheapest calling plan. And if you make a lot of long distance calls, get a prepaid phone card.
Skip the babysitter. Set up a co-op arrangement with friends and neighbors.
Stop smoking. Quitting a pack-a-day habit will save you about $1,095 a year.
Cut back on dining out. Send the amount you save to your DPA.
Never open a catalog. Toss them out immediately. If you peek inside you're bound to find something you like.
Don't carry much cash. If you leave your ATM card, your credit card, your debit card, your checkbook, and most of your cash at home, it will be hard to spend much. Instead, carry enough cash for the day plus one bank check and, for travel emergencies, several traveler's checks.

3. Open a DPA - You'll need a special account - such as a Down Payment Account -  to hold your savings, such as a high-yielding bank savings account or certificate of deposit (CD). Keep in mind that bank CDs have a definite advantage over a money market or savings account: The money in a CD is tied up until it comes due. In other words, you'll be penalized if you take the money and run before the maturity date. Bottom line: You'll be less apt to use this money for something other than your house. CDs come in a variety of maturities from one to five years. Figure which time horizon matches your ownership goal.

4. There are some local or federal government programs (such as first time buyer programs) that exist to help people to enter the housing market.
You can qualify as a first time buyer even if your spouse has owned a home before, just as long as YOUR name has not been recorded on any other trust deed.  Your real estate agent will be able to offer opinions and information on financing options and will be able to refer you to a lender who works within the real estate office.   That lender will be able to go over the requirements of qualifying for special financing with you - you may be pleasantly surprised to discover that you can buy a home with much less of a downpayment than you thought.  If you are looking for a home, contact an agent and let him or her know exactly what you are looking to buy house-wise and what you are able to do financially.  The agent should then look for houses with special financing arrangements and also put you in touch with a loan officer.

5. It is possible to receive a loan against other secured assets - vehicles are an example.  It is possible to gather together a reasonable downpayment when you own vehicles free and clear which can be used as security.  This approach, however, means incurring some debt.

6. Have you ever heard the term "Owner will carry" or OWC?  That means that the seller is willing to help you to buy and finance the home that they are selling.  The seller may be willing to "carry back" a second mortgage against the property.  Let's say you have found a property for $100,000 but the bank expects a 20% downpayment ($20,000).  Sellers that are willing to carry back a second trust deed will lend you that $20,000 as a lump sum which you then pay back to the seller monthly, enabling you to buy the seller's house. You don't actually see that $20,000 - escrow will handle all the paperwork details. Some sellers will even pay all or part of your closing costs as an added incentive to find a buyer.
BUT remember, that if you default on ANY mortgage, the owner of the trust deed can foreclose the property - paying the seller back (the second trust deed holder) is EVERY bit as important as paying back the primary trust deed holder (the bank that lent you 80% of the home purchase price).

7. It is possible for you to buy a home even if you have problems with your credit rating. If you can come up with more than the minimum downpayment, or can secure the loan with other equity, many lending institutions will consider you for a mortgage. The more of a downpayment you have, the less of a risk you are considered to be.  Alternatively, a seller carry-back mortgage as described above could also help you in this situation.

If your parents or other relatives send you presents for your birthday, anniversary or the holidays, they might instead contribute to your Downpayment Account. Don't insist - some parents prefer to shop for special gifts for their kids. However, it won't hurt to let them know about your goal.

Along the same lines, perhaps you have considered buying a larger dwelling that you can share with other relatives who are willing to use their good credit and assets (along with your assets too, of course) toward buying the property - many people do this and it can work VERY well.   Every principal takes a share in the property and has their name recorded likewise on the trust deed - that makes you all partners in the property.  Some families buy properties in this way because some of those properties have more than one house on the lot which makes for an excellent solution all round.  It won't work for everyone but some equity is better than no equity whatsoever, and at some point, you can "buy out" other partners' shares (if they are willing) or sell your own - maybe you will have accumulated enough equity to go out and buy your own home.   You should consult with a real estate lawyer for more legal advice on this option!

8. Go automatic - If you don't see it, you won't spend it. Arrange for a certain dollar amount to be taken out of each paycheck and automatically transferred to your savings or money market account at your bank or credit union. If you're self-employed, set up the same type of plan at your bank and have money transferred each month from checking to savings or to a mutual fund.

9. Reduce credit card debt - Always pay at least the minimum due each month on your cards to avoid high interest rates. Better still: Pay each bill in full and completely avoid high rates on unpaid balances. And make certain you mail the check (or transfer the money) well in advance of the payment date. A growing number of credit card issuers are hitting customers with late arrival penalties.  Ideally, you should wipe out credit card debt as quickly as possible. Begin by paying down the credit card with the highest interest rate first.

10. ... and keep on paying! ... - When you pay off a car loan or education loan or get rid of a credit card debt, continue to write a check for that same amount every month BUT put it into savings. You've learned to live without that money, so now you can SAVE IT!


FINAL THOUGHT: You should get preapproved for a home loan before you go looking for a home. Preapproval is easy, and can give you complete confidence when house hunting. Mortgage lenders can obtain written preapproval for you at no cost and no obligation, and it can all be done quite easily with a phone call. More than just a verbal approval from your lending institution, a written preapproval is an excellent negotiating tool when you've found the house you want to buy and wish to make an offer. It shows the seller that you're serious about buying a house and makes the seller more inclined to negotiate with you.  A pre-approval will involve a completed credit application and a certificate which guarantees you a mortgage to the amount a lender has agreed to lend.

Take the time to explore your options and learn about the ways you can afford to buy a home.  The road to homeownership can be bumpy BUT I believe that once you have set your sights on becoming a property owner it will only be a matter of time before you achieve it.  I hope this information has given you some ideas on accumulating that down payment for your new home - good luck and I am, of course, available to help you find your dream home when you're ready!




Please call Sandee Conley at 1-877-SCONLEY for more information ...   Serving Palmdale - Rancho Vista - Quartz Hill - East Lancaster - West Lancaster - Ana Verde - Barrel Springs - Rosamond - Acton - Leona Valley - Littlerock - Canyon Country - Aqua Dulce - Sand Canyon - Antelope Acres - Antelope Valley - Bouquet Canyon - Green Valley - Lake Elizabeth - Lake Hughes - Santa Clarita and the surrounding communities of AV & Los Angeles County.