With interest rates so low, many people are scrambling to find extra money to buy a new home. Therefore, many buyers have recently asked me, ""What are some alternative methods for coming up with a down payment?" Many lenders are wanting around $5,000 to $10,000 down.
Here are some alternative sources of funding that many buyers may find helpful:
· Use your savings account. Do you have a savings account that has accumulated a few thousand dollars? If so, use it.
· Borrow from your 401(k) plan. You have a 401(k) for this purpose, to help you out when in need. You need it now.
· Tap into your money market account. You've been investing for your future...your future is now.
· Borrow from your IRA. Your IRA is like your money market fund, meaning: your future is now.
· Ask for a raise. A signifigant raise can really help with a down payment.
· Get a second job. If asking for a raise didn't work, get a second job. This works well for young people who have not established themselves in their professions yet.
· Get a gift from a relative or a friend. You are allowed a financial gift of up to $10,000 each year without having to pay taxes on it. If you have someone in your family with cash like that, ask them for it.
· Auction off your unwanted items. Open up an eBay account and auction off your unwanted items or sell them on Craigslist. You can actually make a good bit of money in your spare time if you have items in good condition.
· Ask the seller to assist you with the down payment. Some sellers will be willing to offer a carry-back mortgage to sell their house faster in a competitive market. This also helps the buyer afford a home they may not have been able to otherwise.
Many lenders can still be found that don't require a down payment. These types of loans are typically reserved for buyers with good credit and first-time buyers. The interest rate may be higher in this case, but not always.
Some of these ways to find money are so simple, that many of us don't even stop to think about it. So now that I've given you all these hints, good luck on finding your down payment.