San Diego, CA (PRWEB) June 21, 2014
Collecting enough cash for a down payment on a home is probably the most difficult hurdle potential new home buyers will face. The fact that home prices are rising makes it even more difficult to come up with the money they will need to get their foot in their door of their future family home. Luckily, there are ways for those who do not have enough money for a down payment to jumpstart their journey to home ownership. But what are the best home loan down payment assistance options? LoanLove.com takes a look at some of assistance programs and savings strategies which can help home buyers get their down payments together in their new guide.
This new guide from Loan Love titled, “Home Loan Down Payment Assistance (Know Your Options)” says, “Before you settle on one or more pathways for coming up with sufficient cash for your down payment, be ready to put each potential source to the test by asking the following questions:
- Are you able to verify beyond any doubt that the source of your down payment is legal and not a scam?
- Has your bank lender or mortgage broker confirmed that your potential source is an approved one, according to the rules of your particular loan program?
- Have you reviewed your plan with a certified public accountant to determine impacts on your taxes and/or retirement account, as applicable?
- Are you prepared to keep a detailed paper trail of any transactions for both your lender and for tax purposes?
•
Once you’re ready to keep these four questions in mind, you can move forward by carefully considering your options for securing enough to cover the down payment on your new home.”
The home loan down payment assistance guide first takes a look at some of the low risk options that pretty much any borrower can consider. Things such as selling off any high priced items that are not necessary in order to come up with the extra cash, asking friends and family for contributions or unofficial “loans”, and looking into state and local housing incentives are all covered along with many other options. The article also takes a look at some other options which may require more of a commitment on the part of the potential home buyer.
These home loan down payment assistance options include doing the following:
- “Ask your lender. No, don’t ask your lender for a gift. Discuss whether he or she might reduce their origination fee or fold some of your costs into a monthly payment. This may cost you more in interest, so be sure to weigh the pros and cons before exploring this route.
- Negotiate with your seller. Some sellers may be willing to cover a portion of your closing costs, which could free up more cash for your down payment.
- Bank with your seller. While rare, there are instances where a seller may be willing to finance your purchase and accept a lower down payment than conventional financing.
- Tap your IRA. While withdrawing money from your retirement account is never worth it due to the tax implications, there is an exception on withdrawals from retirement accounts that allow first-time homebuyers to take up to $10,000 from an IRA as a down payment. Avoid simply withdrawing money from your tax-deferred retirement account. The IRS will hit you with a huge penalty and you will have difficulty ever making the amount up again.
- Borrow from your 401(k). Ask your plan administrator to discuss the pros and cons of borrowing the down payment from your 401(k), if you have enough vested funds. He or she can also discuss the process in detail.
- Time a job change. You may be able to negotiate a portion of your down payment as a sign-on bonus or other part of your package if you happen to be contemplating a job change.”
For more information and advice, click here to read the full article on LoanLove.com.