Okay so now you know you really want to purchase a home. If you still don’t have enough money saved to cover your down payment and closing costs, below are some ideas on how to come up with the money. Always check with your lender about great down payment assistance programs which you may qualify for.
IDEAS FOR WAYS TO COME UP WITH A DOWN PAYMENT
1. Ask your parents, other relatives or friends for help. If they can’t give or loan any money, perhaps they’ll agree to co-sign the loan.
2. Sell (or borrow against) other real estate you own.
3. Sell securities you own, or borrow against them through a loan from the stock brokerage.
4. Sell collectibles or heirlooms you own.
5. Cash in (or borrow against) the built-up value of any life insurance you have.
6. Withdraw money from your IRA. If you’re a first-time buyer you can pull out $10,000 penalty-free (though you must pay state and federal income tax on it) to put toward your home purchase. If your’re not a first-time buyer, pull out the very least amount you must. Otherwise, you will have to pay both the 10 percent
penalty and income tax on an early withdrawal. Always consult your financial adviser and tax accountant prior to any withdrawals from your IRA.
7. Sell a boat, Rv or second car you own and use the cash for the down payment.
8. Get a second job. It’ll help raise cash.
Your mortgage broker will help guide you through mortgage programs which require less than 20% down (FHA, USDA and VA). But please remember some of these programs will require mortgage insurance.
Mortgage Insurance – Lenders Mortgage Insurance (LMI), also known as Private Mortgage Insurance (PMI), is insurance payable to a lender when taking out a mortgage. It is an insurance in the case that the mortgagor is not able to repay the loan, and the lender is not able to recover its costs after foreclosing the loan and selling the mortgaged property.