Gone are the days of no down payment alternatives, down payment assistance and seller-offered programs to come up with the money needed to buy a home.
To successfully purchase a home today, you will need a down payment of at least 3.5 percent of the purchase price. While it may be difficult to imagine coming up with enough money, you do have several options when it comes for getting help increasing your down payment.
Here are five ways you can come up with a down payment on the fly:
Gift Money
Gift money is simply that, a gift from a family member. If you decide to get family assistance, you will need to be very clear whether the funds are a gift or a loan, and you’ll have to be able to prove that the gift money was given as a gift.
If you receive a loan from family or friends, draw up repayment terms, and if you receive a gift, keep in mind that parents can give up to $13,000 annually to their children without having to pay gift taxes.
The gift giver will also need to provide a gift letter (stating that it’s a gift and not a loan) and a paper trail for the monies they are gifting for the benefit of the buyer. In other words, they will have to provide a bank account showing that they had the ability to gift the money to you.
Savings Plan
Although it might take a little time and discipline, an old-fashioned savings plan can be a great way for consumers to put together enough cash for a down payment. If you sit down and analyze your personal budget, you may find a few areas where you can reduce your expenses – and if you don’t yet have a budget, establishing one is your first step toward finding some money you didn’t know you had in the first place!
Borrow from your 401(k)
Most companies let employees borrow from the balance of their 401(k) accounts, especially when looking to purchase a new home. Rules vary but, generally, you can extract as much as half of the vested amount in the account, up to $50,000.
If you can borrow money from your 401(k) for your down payment, this is generally accepted for helping you to qualify for purchasing a mortgage loan. Because it’s a loan rather than a withdrawal, this does not trigger the early withdrawal tax penalty.
Sale of a Good
Some of your down payment cash could be sitting right in front of you. Consider looking through all of the stuff that you have accumulated and see if there are things you no longer need, but which have some value and would be worth selling for fundraising purposes.
Getting rid of some of those assets and turning them into something that’s going to be more productive for you, like cash for a mortgage down payment, is your best bet. Once you have assembled an inventory of items you would be willing to sell, consider holding a garage sale or selling them online via eBay, Craigslist, or some similar site.
Consider Taking out a Short-Term Loan
Where a down payment lacks, enter strength in income. You can take out a line of credit or a personal loan, deposit the funds into your bank account, let it sit for two months, and then it will be eligible for use in your mortgage transaction.
If you are unable to get approval for a conventional bank loan, it’s time to look into collateral loans. One great option you should consider is a car title loan, which provides you with a loan pegged to the value of your vehicle in exchange for temporarily giving up possession of its title.
As long as you keep making loan repayments on time, you will retain the right to use your vehicle, and as soon as you have paid off the loan in full, you will regain possession of the title.
Car Capital Financial
If you are interested in receiving an affordable, high-quality, hassle-free car title loan, then be sure to contact Car Capital Financial today. Title loans are issued based on the borrower’s ability to repay the loan.
We have provided car and other vehicle title loans to Southern California for over 17 years, and we specialize in lending to people with credit problems.
To speak with a title loans adviser and get the cash you need in as little as 30 minutes, please call us now at 1-888-500-9887.