What Money For Down Payment Can I Use
Now you are ready to buy a home and you are hearing that you need money for a down payment
. Wow you had not thought about that. So you are wondering what you can use for money for down payment. It is really good if you have planned ahead and saved some money for your down payment. But if you have not, do not worry. In this article I will give you some ideas where you can look for that needed money.
Many times the money for down payment is really there for you but you may not be aware of it. Here is a few areas you can check into and I will explain how:
401K or IRA money
Life Insurance money
Gift money
Sell some unnecessary items
Borrow from your 401K or IRA retirement accounts
If you have never owned a home before, the IRS will allow you to take some of your IRA money (up to $10,000) to put toward your down payment. If both you and your spouse have IRA accounts, then you both can do this if both of you have never owned a home before. That could give you up to $20,000. That would help a lot with money for down payment! The IRS will not apply a penalty for this either. But, depending on the IRA, they may require you to pay the tax on the money you took out.
Perhaps you or your spouse have a 401k with your employers. Most 401ks will allow you to borrow from them. The down side to using this option is you do have to pay it back. So if you plan to use this option as money for down payment, be sure to plan for that. Depending on the amount, the monthly amount is usually very reasonable. Keep in mind, this is your money, so you are only paying yourself back.
Borrow from your Life Insurance Policy
Do you have a life insurance policy that is not a term policy? If it is a permanent policy, check to see if they will allow you to use some of the money for down payment. Many life insurance policies allow for you to borrow against them. Many times you do not even have to pay it back. The down side of that is your pay out will be less in the event of your death. So keep that in mind if you use this option.
Obtain Some Gift Money
Do not overlook this option. You may be able to get the money from your parents or another relative. Buying a house shows your serious about responsibility and they may be willing to help. You might be surprised what can happen with this option. They may have money tucked away that they planned to give you as an inheritance. Giving a portion of it to you early could be an option. So be sure to talk with family about money for down payment.
Liquidate Some Items
People are always surprised when I mention this option. We always seem to accumulate stuff!! So put that stuff to work for you by selling it. There is always Craigs List or Ebay. So get rid of some of those items you rarely use for your down payment.
This is just a list of a few ways you can find money for down payment. There are other ways such as home mortgage grants, charitable down payment assistance organizations, or have the seller give you money for down payment. All in all, it is not a lost cause. Do your homework and you will be surprised that you actually can put up the money!
by: Jeffrey S. Ragan
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