The gift of home ownership
December 6, 2005
Welcome Home!BY THETEAM@ELICH.COMFor many buyers, especially first-time buyers, saving up the funds for a down payment can be an almost insurmountable hurdle to home ownership. This doesn’t have to be the case. There are many creative ways to come up with a down payment.
Set up a special down payment savings accountDuring this holiday season, let your family and friends know that you’re saving to buy a home. Ask them to contribute to your special down payment savings account instead of buying gifts. For many loan programs, a gift may be used for a portion or all of the required down payment. Some lenders won’t let you use more than 10 percent of the total purchase price in gift money. Others will accept as much money as your relatives want to bestow on you. Be sure to tell your lender up front that you plan to receive gift money. He or she will tell you about good loan choices, like FHA. Unlike many other loans, FHA will accept gift money for your entire down payment and your closing costs. If you are the lucky recipient of a large gift of funds, you’ll need a “gift letter.” The person giving the gift is required to sign the letter, and state that the funds are a gift and not to be paid back. Although it sounds too good to be true, giving as much as $10,000 per year to a child or close relative is sometimes a beneficial tax decision for parents, so don’t rule it out!
Down payment assistance charitiesIf a willing and able family member is not available, buyers also have the option of turning to a non-profit for down payment assistance. Caution should be taken when searching for a down payment assistance charity; there are many reputable organizations providing buyer assistance, but there are dubious ones as well. The Colorado Association of Realtors Housing Opportunity Foundation (CARHOF) is a 501(c)3 charitable foundation created in 1990 for the purpose of promoting safe, decent and affordable housing for all in Colorado. CARHOF collects interest on escrow accounts and donates the money to nonprofit and public agencies that help low to moderate-income families with their housing needs. A Board of Directors made up of volunteers from the real estate industry, the Colorado Bankers Association and the public sector controls CARHOF. Each local board of Realtors has a CARHOF representative who directs the activities of the foundation in their community.
Who does CARHOF help?CARHOF helps the homeless, victims of domestic violence, first-time homebuyers, families threatened with eviction or losing their homes, victims of a natural disaster and more. Individuals should contact their local housing agencies for information about available assistance programs. Only Colorado based, 501©3, housing organizations, such as the Summit Housing Authority, are eligible to receive grants. The funds are then distributed to qualified individuals.WELCOME HOME! is compiled by the TheTeam@Elich.com. Butch Elich has been helping customers with their real estate needs in Summit County for over 20 years, and is the current president of the Colorado Association of Realtors Housing Opportunity Foundation (CARHOF). His team includes office assistant Claire Albers and associate broker Paula Parker. Find the Elich.com Team at RE/MAX Properties of the Summit in Frisco. They can be reached at (800) 806-9518 or at firstname.lastname@example.org.