Print Article for : Down Payment And Closing Cost

Your Online Guide » Guide to Finance » How To Handle Finances

[D624]Down Payment And Closing Cost

by Jennifer Hershey, Jen

But there are also many of us out there that have not had the luxury to save as much as we would have liked for various reasons. With this challenge at hand, we will need to track down a source for a down payment.

If you have excellent credit, and when I say excellent, I mean your credit history is perfect without a blemish on it, you will most likely be able to apply for a mortgage with 100% financing, if you choose to go that route.

A lot of lenders offer this product, and if you can swing it, than you won't need to come up with any cash for a down payment, and you will only be responsible for closing costs.

If you are unable to go with 100% financing, here are a few ideas you might look into to come up with a down payment.

Retirement Plans

If your employer offers a retirement plan such as a 401k, you might want to consider borrowing from it to help out with your down payment. Most 401k plans offer this option for home purchasing reasons. You do however have to pay this money back on a monthly basis.

The down side to using a 401k plan is that when you pay the loan back, you are doing it with after tax dollars.

With that being said, it is still worth looking into, and a lot of people consider this option.

When all else fails, ask family members to give you a helping hand. This is not an uncommon practice among newlyweds who often approach their parents for assistance with their down payment.

If this is not for you, I understand. It can be tough to swallow your pride and approach family members to help you out.

If you are at the end of your rope, and there doesn't seem to be any down payment money in sight. You just might have to bight the bullet, start saving, and wait it out.

A great way to jump start your savings is with your tax return money. Depending on what your return is and what percentage the lender requires you to put down, your tax return could have you in the door sooner than you think.

Unique Down Payment Strategy

Making a down payment on a house purchase can be a breeze or incredibly challenging depending on the type of loan you are pursuing. Depending on your credit and available loan programs, you might be able to get away with a no down payment loan, three percent, ten percent, twenty percent or twenty five percent. The higher the percentage, the more difficult it can be. A twenty percent down payment on a $300,000 loan is $60,000, a figure most people are going to have great trouble nailing down.

If you have to put a sizeable chunk down, your finances can be strained to the maximum trying to come up with it. Ironically, you may not be aware you have the money available to you in a unique place. If you participate in a qualified retirement plan, things could be looking up.

The legislation establishing the existence of 401ks contains some surprising clauses. Specifically, there is language that allows you to take loans from the retirement plan. Generally, the loan amount can equate to fifty percent of your vested interest.

Americans are horrific savers with one exception. They tend to stuff money into retirement plans because it makes sense to since the contributions are pre-tax. If you have been doing so for a number of years, you may have tens or hundreds of thousands of dollars in your account. Welcome to your down payment funding account.

Taking a loan from your retirement plan is not a slam dunk decision. Repayment issues have to be analyzed. Typically, these loans have to be repaid within five years and interest is added as well. If you are considering a retirement down payment plan, make sure you talk with the individual in charge of the plan regarding how the process works.

Article Source : Pg. 259

About Author

Both Jennifer Hershey & Raynor James are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Jennifer Hershey has sinced written about articles on various topics from Finances, Real Estate and Disneyland Vacation. . Jennifer Hershey's top article generates over 74000 views. to your Favourites.

Raynor James has sinced written about articles on various topics from Real Estate, Business and Finance and Debts Loans. Raynor James is with the site - FSBO America - homes for sale by owner.. Raynor James's top article generates over 90500 views. to your Favourites.