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 Accumulate Your Downpayment

One of the problems facing potential homebuyers today is finding enough money for the downpayment and closing costs. The money available can greatly limit or increase your purchasing power. Rather than saving all of the money yourself, some options may help. Here are ways to accumulate the downpayment that are acceptable to us.

  • Have a relative give the money as a gift.
    Documentation will be required proving the money is actually a gift and not a loan. Any taxpayer is permited by the IRS to give up to $10,000 yearly to another person without paying a gift tax. Technically, your mother could give you $10,000 and give $10,000 to your spouse. Your father could do the same, giving you $40,000 for a downpayment and closing costs. (Note: Unless you are putting down at least 20% or are obtaining an affordable housing loan, 5% of the sales price must be your own money.) You should consult your tax advisor for guidance.
  • Borrow against your 401(K)or insurance policy.
    You can cash out your 401(K) but you will be subject to withdrawal penalties and payment of taxes. If you borrow against it, the payment may be counted as a debt. You should consult your tax advisor for guidance.
  • Sell or borrow against an asset.
    Selling an asset such as a car can help increase the amount of money you have available. Borrowing against an asset is also acceptable as long as you qualify with the additional debt.
  • Obtain a low point or zero point loan.
    This will reduce your closing costs substantially. In some instances, we can pay all or part of your non-recurring closing costs, with higher pricing (i.e., rate).
  • Ask the seller to pay for all or a part of your non-recurring closing costs (within allowable limits).
    Your real estate agent can assist you with this when you make an offer on a home.
  • Ask the seller to carry back financing.
    If the seller does not need all of the equity in their property, they may be willing to carry some financing reducing the amount of your downpayment.
  • Consider different loan programs.
    I can help you determine the best loan program for you. There is a variety of programs requiring lower downpayments and assisting with closing costs. There are also city and county down payment assistance programs you can investigate.

I have an article "Buying your home in 2008" by email explaining negotiating strategy in today's market.

As a Certified Mortgage Planning Specialist, I offer an analysis of your situation today can make suggestions on how small changes in how your debt is structured today can have a life changing effect in the years to come.  Read more about this free, no obligation service.

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