Wednesday, October 28, 2015

Down Payment Issues: Why Most Homebuyers Turn to Family for Help

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It is undeniable that the percentage of home buyers relying on their family is gradually increasing. And admit it! There are some homebuyers here who still seek help from their parents or any family members. Well, asking for help is not a bad thing at all, especially when you are a part of their family. However, if you are starting your own family and wants to leave your parent's home, asking some help when it comes to your down payments might not be a good image for you – that whether you agree with me or not.

Generally, what most homebuyers, especially first-timers would do when they decide to invest on their own home is that they will avail a home loan – usually parental loans. Financial experts say that one of the best gifts one can have is the help of their parents, with no expectation of repayment. Generally, if parents insist on investing in a home property as a gift for you and your own family, you have to make sure that there will be no strings attached to it. You should have the right documentation, including a letter that clearly states that the gift-giver doesn't expect repayment.

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However, if that's not the case, then parental loans fall under the category of unsecured debt. In fact, a loan from a parent could raise a borrower's debt-to-income ratio sufficiently to result in disqualification for a mortgage. That means, no asset is acting as collateral which can pose a lending risk. Moreover, a family loan is a burden that could affect a borrower's ability to make monthly payments. And most companies don't allow unsecured debt such as credit card advances. Companies want to be certain that every transaction that you have with them has an assurance that you can pay the down payment and its monthly dues.

Basically, if you don't have enough income and/or savings to sustain your obligations, then there is also no guarantee that you can avail home loans. Sometimes, if a loan would not be applicable on your end, then cash is needed. And for first-time homebuyers, this is one of the problems they usually faced. Yes, the process of investing is not that simple. There are certain guidelines that you need to follow in order for you to be qualified in investing your own home.

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If you want to impress the parents of your wife or live your own life, you have to make sure that you are capable of living a happy and normal life. Yes, cliché as it may seem, but having and securing your own savings is a must for you to do. When banks know that you have enough savings, and your job can produce a sustainable income, there is a higher possibilities that you can be qualified to invest and have your home loan.

Sometimes, savings is definitely hard on our end since there are a lot of things that we need to think of, such as our daily expenses. However, knowing how to budget your money in order for you to have your own savings is one of the musts for you to do. Yes, there are just times that we want to seek help from our parents, but it doesn't mean that we cling and depend to them in every real estate transaction that we need to make in order for us to achieve what we really wanted.

Moreover, if you are just discipline yourself when it comes to money matters, then saving for your future is not as hard as you think it is. In fact, it is one of the most important things for you to do in life – that is to save and own your home.

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