Buying a House & Down Payment It is spring, the perfect time to start thinking about buying a house! But where and how do you start this journey? Often people want to begin with going to open houses, or looking online for the “perfect home”. This could be dangerous as the home you fall in love with may not fit into your budget. There are many things to think about be- fore you look at houses. The better way to start is with your loan officer and taking a look at your house buying capabilities. You will want to make sure your credit is looking good, that you know what you can afford, as well as what you will use and how much you need for a down payment. Let’s talk about down payment options that you may be able to use to purchase your home and how much you may need to put down. Some easy options for down payment funds are: Funds in a checking or savings account. This should be money you have been setting aside. You will have to provide at least two bank statements showing the balance. If there are any large deposits you will need to explain and prove where these originated from. Your income tax refund. This would be a great way to invest your tax refund. You will need to give your lender a copy of your tax return and proof the funds are in your account from the IRS. Stocks, Mutual Funds. Again, a nice option. The lender will need your last two monthly statements to show the funds are in the account. Remember the value is always changing. A gift from a close family member. If you have a family member that is able to and would like to give you a gift for down payment this is often an option you can use. There are a few very strict rules. Talk to your lender to find out what they will require. A Grant. Depending on your income, the loan program you choose and sometimes where the home is located, you may be eligible for a grant from an organization or government entity. Each grant program has its own guidelines. Some loan programs may not allow specific grants. Ask your lender for details of any grants they may offer. Borrowing or taking a distribution from your 401k. This may be an option for some. Check with your employ- er first to see if they will allow an early distribution or loan from the plan. If so, find out if there will be any income tax consequences that may cause you a hardship.
When considering how much to put down, talk to your lender. There are many options, and different programs that will allow you to put down less than 20%. Your lender will be able to give you op- tions and guide you to the perfect amount and way to fund your new home. Member FDIC & Equal Housing Lender
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