3 Easy Ways to Get a Down Payment When Buying a Home

Published On: September 30, 2020|Categories: Buying Tips, First Time Home Buyers, Home Buyers, Jasper IN Real Estate|Tags: down payment, downpayment|

There are numerous financing options available to home buyers today. Some provide you with the ability to put as little as one to two percent down, and some even provide you with 100 percent financing. While there are low and no down payment options available, some may be required to make a larger down payment. Others may prefer or need to make a larger down payment to keep the mortgage payment lower. If you are trying to find funds to make a down payment on the purchase of your new home, consider these creative options.

Draw From Your Retirement Account

You may have heard that you should never pull money from a retirement account unless absolutely necessary, and there is wisdom in this. However, you may qualify for a low-interest or no-interest loan from your retirement account, and you may not have an early withdrawal penalty imposed in certain instances. You can speak with your retirement account broker in detail about this option as well as how much money you may be able to pull out of the account. While a loan is one option, you may also take an early distribution if you are willing to pay the taxes and the early withdrawal fee.

Pull Money From Your Life Insurance Policy

Many people have a universal or whole life insurance policy. These policies accrue cash value over the years, and you may be able to borrow funds from the policy or take a straight distribution from the policy. Keep in mind that this may affect your death benefits until the funds are repaid in full. Generally, however, there is no qualification required to borrow against the policy, and you may qualify for an attractive loan term.

Request a Gift From a Family Member

Many lenders will allow you to accept a gift of funds from a family member. There are often very specific rules that must be followed with regards to the gift. For example, the individual may be required to sign a statement attesting to the fact that the funds are a gift rather than a loan. Some lenders may require the funds to be deposited into the individual’s account several weeks before the closing date. If you plan to use a gift of funds from a family member, inquire about the rules and requirements up-front to ensure that you will be able to use the funds for the down payment.

In some cases, individuals may use one of these sources to obtain a down payment. Others may use a combination of them to obtain the maximum funds possible. With these creative options coupled with the funds that you may have already saved, you may have ample funds available to make a down payment on your new home.

Are You Thinking of Buying a Home in Dubois County?

Use our site to search homes for sale in Jasper, Dubois, Spencer, Martin and Davis counties and all of our surrounding areas. Unlike the “big name” sites out there, at Sell 4 Free Welsh Realty our site is directly connected to our local MLS and is updated with new homes every hour. By signing up for New Listing alerts you can stay on top of the newest homes for sale and get price change alerts so you can stay ahead of other buyers and beat them to the hottest deals!