Search:

News by Subject
Complete list of specialty news sections.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Mortgage Industry News
Subscription-based news for people who work in real estate finance.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories for your web site or for your RSS reader.

News Archives
Archive of news entries.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Graphs
Directory of lenders, branch operators and mortgage service providers.
home advertise email RSS about us
 
HOT Topics Rates Glossary LO License Search
Consumer Mortgage News
Free mortgage news for current and prospective borrowers from a leading online mortgage industry news publication.



How to Come Up With Down Payment for Home Purchase

Kay Bell: 10 ways to come up with a down payment

Sept. 10, 2015

By KAY BELL Bankrate.com - Tribune News Service


You've found the perfect house. Interest rates are still low. There's just one thing standing between you and your dream: a down payment.

Don't abandon your homeownership quest just yet. Here are 10 ways to come up with the cash for your new castle.


Pay Off Your Plastic
Paying bills is not fun, but it definitely will help in your hunt for down payment money. When you carry a credit card balance, the ever-accumulating interest charges mean more of your money goes to the card company each month. Keep that cash for yourself by cutting your debt load.

Prioritize your debts and pay the most on the one with the highest interest rate.

Once that's paid, shift your focus to the next highest rate and so on.

You'll get the most money-sucking credit card bills out of the way more quickly, freeing up more of your income to go toward building your savings.


Ladder CDs to Boost Savings
Once you've got a few extra bucks, put it to work making more money for you.

Many investors prefer certificates of deposit. They are low-risk and relatively accessible.

But when interest rates are low, the return isn't always what a saver hopes.

You can maximize the earning power of CDs by buying different certificates at varying maturity dates.

For example, instead of buying one big CD, parcel out your money into 3-month, 6-month and 1-year certificates. Known as laddering, this gives you flexibility to adjust your savings as rates change. Laddering allows you to lock in when rates are high. And when rates aren't so good, the process keeps you from being stuck for too long with low earnings.


Use Special Programs
There are many programs for homebuyers in down payment distress.

Borrowers in a wide range of incomes, locales and professional groups may have access to aid from Fannie Mae and Freddie Mac, the government-sponsored offices that buy mortgages and package them as investments.

Various nonprofit and community groups also lend a hand to buyers struggling to put money down on a home. And don't forget about assistance from state agencies.


Tap Your IRA
If you're looking to buy your first home, let the IRS help.

Tax laws allow you to use up to $10,000 in IRA funds as a down payment if you've never owned a house.

If you're married and you both are first-time buyers, you each can pull from your retirement accounts, meaning a potential $20,000 down payment.

Even better is the IRS definition of first-time homebuyer. Technically, you don't have to be purchasing your very first abode. You qualify under the tax rules as long as you (or your spouse) did not own a principal residence at any time during the two years prior to the purchase of the new home. In these instances, Uncle Sam waives the penalty for early withdrawal, but you may owe tax on the money, depending on the type of IRA. Many cash-strapped homebuyers, however, find the long-term return of investing in residential real estate is worth the short-term tax bill.


Borrow From Your 401(k)
Do you have more retirement money in a company savings plan?

Consider borrowing against your 401(k) for the down payment.

There are downsides to this strategy: Unlike an IRA home-related withdrawal, you'll have to pay back any money you take out of your company plan. The repayment will cost you a bit more because the account contributions were made with pretax money, but your payback will be made with after-tax dollars. At least the interest payments on this loan will be going back into your 401(k).


Get a Gift
Aunt Edna always liked you best. Take advantage of that favored family status and ask her to make a present of your down payment.

Tax law allows gifts of several thousand dollars a year to be bestowed without tax consequences to either the giver or recipient. The gift-exclusion amount is adjusted annually to reflect inflation (it's $14,000 now), so check with the IRS to ensure guidelines are met.

Many wealthy people use this tax rule to reduce potentially taxable estates while they're still around to get the thanks.

Not close to your family? Not a problem. The gift exclusion isn't limited to relatives. The monetary present can be from anyone, so track down a well-off friend now!


Ask for a Raise
No luck finding a benefactor? Then maybe it's time to ask your boss for more money.

Just make sure you do your homework beforehand, and base your request for a salary increase on your accomplishments rather than your needs.


Get a 2nd Job
OK, so you work for the original Ebenezer Scrooge and he humbugged your raise request.

Moonlighting could help you earn the extra money. This option makes the most sense for those who are young and not yet fully established in their professional lives.


Look for Lost Loot
Around $14.5 billion worth of savings bonds is sitting around, ignored by owners and not earning a penny of interest.

Do you have any stashed somewhere?

Make sure your bonds are still adding to your net worth.

You could also have money languishing in an old bank account somewhere or deposits paid to utilities that were never recovered.


Auction Off Unwanted Items
You didn't find any forgotten riches as you were digging through the attic, but there was plenty of other junk up there.

Transform it into your down payment.

Thanks to eBay and similar sites, it's never been easier to prove that one person's trash is another's treasure.


About the Writer
Kay Bell writes for Bankrate.com.

next story

back to home page


To see more of Bankrate.com or to subscribe to the newspaper, go to www.bankrate.com

Copyright (c) 2015, Bankrate.com

Distributed by Tribune News Service.


This story was distributed by TNS - Tribune News Service
 
Refinance News
News about refinance programs, pricing and production.
H A R P 2.0 News
News stories about the H o m e Affordable Refinance Program including expanded program guidelines.





Copyright © 2016 MortgageDaily.com
MortgageDaily.com Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

pricing engine directory

wholesale lender directory

More Mortgage News Resources (MortgageDaily.com full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

free mortgage news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter

MBS

mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

refinance news

reverse mortgage news

sales blog

secondary marketing

servicing news

subprime news

wholesale lenders

wireless mortgage news