You have heard the same financial advice over and over again to save for a house. Perhaps you have tried to save, but one “financial emergency” after another keeps cropping up. After you found your dream home, you decided it is crunch time and you are 100% dedicated to saving up enough money for a down payment.
Do not despair if it seems overwhelming for just two people…or even one! There are others willing to help you reach your goals.
Are you a first time homebuyer? Look for local grants and loans. For example, Cumberland County provides up to $5,000 in closing cost assistance for qualified first-time homebuyers with a gross household income of less than 80% of the county’s median income. Not all programs are income based, so do your homework or ask your Mortgage Broker and/or Real Estate Agent for more details on local or state programs.
Have generous relatives or friends? They can contribute to your down payment in the form of a gift. Before you receive the gift, make sure you clear it with your Mortgage Broker so you have the proper paperwork to accompany the funds. Usually, lenders re
quire a letter signed by the person gifting to the money to confirm it is not just a loan that needs to be paid back as well as copy of the deposit slip. Getting married? Consider creating a bank account for down payment gifts in lieu of silverware, towels, and other traditional wedding gifts you might have already accumulated. There is a special HUD form your broker will need to fill out to setup the account.
Is your 401K worth more as a down payment than its earning potential? This decision might require a call to your accountant or investment advisor, but consider the tax consequences against the type of loan you can get with more down payment funds. Some companies and accounts allow penalty-free withdrawal for certain major life events. For example, some IRAs allow up to $10,000 in penalty-free withdrawal for the purchase of a first home.
Be wise with your nest egg. Are you hiding that future downpayment money under your mattress? Or investing to increase its value as you save up for your home? Some couples prefer to put their savings into a CD they can't access until it is time to purchase their home. It keeps their spending on target with their goals. Moreover, they are earning interest on that money which can also be used towards that goal. Credit Unions and online banks offer better interest rates and the highest-yield savings accounts. If you are really planning ahead and have years to save, consider short-term bonds, but make sure you are not paying any commission which would cut into the savings. Avoid long-term bonds which are more subject to market risk.
No matter the amount of the down payment, you can save enough funds with a little planning and strategy. Do not be afraid to ask the advice of trusted professionals who can help you reach your home purchasing goals.
No comments:
Post a Comment