You’ve found the perfect house. Prices of homes and interest rates are are still low. There’s just one thing standing between you and your dream home: a down payment.
Coming up with a down payment can certainly be the hardest part about being able to afford a new house, especially if this is your first home. However, there are more than just a couple of ways you can do this.
So don’t abandon your homeownership quest just yet. Here are some of the best ways to come up with the cash for your new home.
1. Use Special Programs. There are many programs that are designed for the underfunded purchaser. Many state and local government agencies offer down payment assistance programs and don’t forget some non-profit agencies offer help as well. Each jurisdiction offers a different program. Please contact me for specific guidelines and restrictions for each locality.
2. HUD Homes. FHA offers homes that have been repossessed, however to purchase these homes the required down payment is only $100. To view these homes in the area you wish to live go to HUD.GOV and search for HUD homes or you can go directly if you click here. Keep in mind not all lenders offer financing for this type of program, make sure your lender is able to provide this type of financing on your behalf.
3. Bridal Registry. In 1996 HUD or FHA released guidelines for creating a special type of bank account for gift funds provided to the borrower from other individuals, called a Homeowner Bridal Registry Account. The intent was to give couples planning to get married the opportunity to amass monetary gifts from friends and family for the specific purpose of making a down payment on a home.
4. Gifts. Gifts can be allowed for 100% of the down payment. However the gift must come from a bona-fide family or family-type member. Non-profit agencies may provide gift funds, but cannot pay other non-affiliated outside borrower costs. Also, guidelines on gifts can vary based on the type of loan program (i.e. Government or Conventional).
5. Borrow From Your 401K. Do you have a retirement in a company savings plan? Why not borrow against your 401K for the down payment. The cons to this strategy is that the loan would have to be repaid back and the monthly payment would be counted against your debt-to-income ratio. Make sure you consult with a tax professional before attempting to do this strategy.
6. Tap Into Your IRA. If this is your first home purchase, let Uncle Sam (IRS) help you out. The tax laws will allow you to use up to $10,000 from your IRA for a down payment on a purchase of your first home. If you’re married and you both are first-time buyers, you each can pull from your retirement accounts, meaning a potential $20,000 down payment. Make sure you consult with a tax professional before attempting to do this strategy.
7. Get a Second Job. Get a part-time job to provide your down payment.
8. Increase Your Withholding. If getting a second job doesn’t pan out for you then you may want to increase your withholding in anticipation of your standard deductions in owning a home. You will be able to take home more income and save for your down payment. However, be careful with this strategy as you may want to consult with a tax professional in regarding the potential tax consequences.
9. Sell Your Unwanted Items on Ebay. Yep, I said it. You could have a garage sale or a typical auction to sell your items. Why not sell them on Ebay and get some extra cash to help with your down payment.
Hopefully this will help you think of some ways to come up with a down payment. These 9 are some of the better ones “in my opinion” to use in assisting you to become a homeowner. For other free tips on educating yourself on getting the best out of your home purchase, feel free to click here and sign up for your FREE weekly tips on the path to homeownership. Also, feel free to contact me to discuss even more ways to come up with a down payment.
Until next time…
Geoffrey Bolen
Your Mortgage Advisor For Life
Primary Residential Mortgage, Inc.
Phone: 301-588-4701 x84 | Fax: 301-588-4709
Email: gbolen@primeres.com
P.S. It’s my intentions to continue building lifelong relationships one client at a time and remain your personal mortgage advisor for life. If you know of a friend, family member, or coworker who is looking for financial options, either through purchasing or refinancing a home, don’t keep me a secret. Be sure to call or send me an e-mail, I know someone. Your referrals are the greatest compliment I can receive.






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