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Quick Ways to Come Up With a Down Payment

January 23, 2021
Published by Grayhawk Homes

Whether you’re a first-time buyer or a buyer who wants to put more down than what they have available in their current house, there are times when you need to come up with a chunk of money fairly quickly. Especially considering the smaller number of new homes in Auburn AL currently available, you may need to act fast to get your dream home. Sadly money doesn’t grow on trees and there’s always going to be some downside to these options, but there are potential options if you’re serious about buying a new home.

The obvious choice is to turn to family. This is ideal if your family members can chip in, as there’s no limit to these gifts when it comes to the official process of buying a home. However, there is certain paperwork the gifter will need to fill out, essentially a gift letter. Also, the amount is taxable, although up to $14,000 per parent is tax exempt.

Another option that people often miss are programs through the city and state, or non-profits. These programs typically work with banks that might not normally work with a client, helping you get a loan and getting the bank a new client. Bank of America has a list of these cooperating programs. However, there are still requirements for many of these programs, which can vary, including the percentage of your income versus the median income of your desired neighborhood.

If you work for a hospital or university, or some other big company that doesn’t want a lot of turnover, you may find out that your company may have some sort of employer-assisted housing program. The loans are often low-interest or even no-interest in some cases, so if you work for a large enough company, you may want to check with HR to see if this is an option.

Finally, if you’re really desperate, you can break into your 401(k) or IRA. However, these come with fees for early withdrawals, which can often be up to a 10% penalty on the amount withdrawn. However 401(k) accounts can generally get you the funds within a week if you’re in a hurry. Also be aware that the money you take out is taxable, which could bump you up a tax bracket.

IRAs have the same kind of penalties — unless you’re a first-time homebuyer. You also don’t have to repay what you take out of an IRA, unlike a 401(k). Still, that’s money you’ve been saving for retirement and it can be hard to repay yourself, so try to keep these last two as a last resort.

There are pros and cons to all of these options, so it’s important to weigh out what works best for you. Ideally, you have time to save some more money and not have to resort to any of these options, but if you do, think carefully about which is the best for you in the long run. At least by buying one of our new homes in Auburn AL, you know you’re getting a home that is sure to be appealing to buyers for years to come, turning it into an investment that should make some of those cons less of an issue in the long run.

Categorised in: New Home Tips, Quick Ways to Come Up With a Down Payment

This post was written by Grayhawk Homes