Selling the cow to buy the farm: smart ways to come up with the funds for a home down payment

Selling the cow to buy the farm: smart ways to come up with the funds for a home down payment

Posted on May 3, 2017 in MARK WELLS' BLOG | Comments Off on Selling the cow to buy the farm: smart ways to come up with the funds for a home down payment

Selling the cow to buy the farm: smart ways to come up with the funds for a home down payment

One of the most significant problems facing new home buyers is coming up with the funds for a down payment. Mark Wells of Preferred Financial Services shares some creative—and perhaps unknown—sources that can be used to find those down payment funds:

  • First, the easy one: If you are a military veteran, or if you select a house in a designated rural zone, 100 percent financing is still available. Check with your mortgage broker for qualified rural zones in the Upstate.

 

  • Your IRA: “But I’ll have to pay a penalty for this!” Actually, you may not. If you are under age 59 and have not owned a house in the past two years, you are allowed to take up to $10,000 out of your IRA penalty free to use towards down payment or closing costs on a loan.

 

  • Sell or leverage an asset: It is not commonly known, but you can sell, or even borrow money against a fixed asset (auto, RV, etc.) and use those funds for a down payment. I actually documented the sale of two cows one time for the borrower’s down payment!

 

  • A gift:  FHA allows for all of your down payment to come from gifted funds. Conventional lenders allow gifted funds if you already have your own 5 percent down payment (unless the total gift you receive is 20 percent, then you need no funds of your own).  Conventional programs for first time homebuyers (Fannie Mae’s Home Possible and Freddie Mac’s HomeReady program) allow for all of the down payment to be gifted, and only require a 3 percent down payment.

 

  • Your 401-K: All 401-K plans allow for a no-penalty, no pay-back “hardship” withdrawal to use for down payment on a home.

 

With these options interest rates that are still near historic lows, there is no reason to put off buying a house.

I welcome questions and comments regarding mortgage matters, and can be reached via phone at 864-235-9596 or email at Mark@TheGreatestRates.com.

Or Text Me Now! 864-430-4856