Some Buyers who don't have a 20 percent down payment are finding it harder and harder to buy a home. And with the news media keeping the headlines a bit on the negative side to get your attention.... I wanted to try to help reassure you that there are ways to still qualify for the purchase of your dream home. I've said it before and will continue to remind you to Not give up on your dream.
Here are some sources of money that are still available and the pluses and minuses of using them.
- Borrowing from a 401(k). Only some companies allow this. The maximum available is $50,000 ($100,00 if both spouses have 401(k)s) and the loan must be repaid within five years. Failure to do so and the loan will be considered a withdrawal, leaving the borrower liable for penalties and federal income tax.
- Withdrawing up to $10,000 from an IRA for a purchase of a first home. Spouses who both have IRAs can withdrawal a total of $20,000. A potential borrower who hasn't owned a home in the past three years is considered a "first-time buyer" for this specific purpose and can make a withdrawal. Federal taxes must be paid on the withdrawal at the borrower's current marginal tax rate.
- A gift. If buyers are comfortable asking for money, their parents, friends, and relatives can give a gift toward the down payment. But for the lender to approve it, the giver must sign a gift letter stating that the money doesn't need to be repaid.
- Nehemiah (http://www.getdownpayment.com/)%20is still in business and will allow. Thanks to the Nehemiah Program , more than 230,000 individuals and families now own homes. If you are a qualified homebuyer using an eligible loan program, such as an FHA loan, you may be able to move into your new home with zero cash out of pocket! The Nehemiah Program can help you become a homeowner! They offer:
- Gift funds up to 6% of the final contract sales towards your downpayment and/or closing costs
- Gift funds for both first time and repeat homebuyers (Nehemiah charges a nominal processing fee that may be paid by the seller, homebuyer, or lender.)
- Gift funds for both new construction and resale homes
- No repayment of gift money
- No income or asset limits
- No geographical restrictions
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Most counties and cities in California has a First Time Home Buyers Down Payment Assistance Program that you can contact and apply for amounts up to $100,000 in some cities. Do a search on the city you are interested in living in and see what they have to offer and find out what the requirements are.
MERRY CHRISTMAS to you and your family & Friends!
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I have had buyers use their 401K as a loan as well. They can only borrow up to 50% of the ammount in there. It works well. They do pay interest on the loan but they are paying interest to themfelf.