The majority of loan programs require some form of down payment. Some programs require as little as 3% of the purchase price, while others do not. The VA home loan program, and the USDA rural area program are two of the most popular programs.
VA loans are only available to veterans and a few other borrowers. The USDA program is designed to help populate rural communities by providing financing in areas that conventional programs will not touch.
There are also closing fees associated with obtaining a home loan. At the settlement table, there are certain costs that must be paid. These include an appraisal and credit report. Other charges, also known as recurring charges, are repeated over and over. Interest and homeowners insurance are examples of charges. Where does one get these funds from? Where do you get your funds?
Bank Account
These accounts will be checked by your lender, to ensure that you have the money you claim to have. Lenders will also want to know that these funds are ‘seasoned’, meaning they cannot just appear. A seemingly random deposit is not eligible for use.
Retirement Account
Many retirement accounts let you borrow money from them. Ask your employer if you can borrow from your 401(k). If you are eligible, the lender may have set repayment terms which will be deducted from your paycheck at each payment period. There are no universal 401(k), loan terms. Instead, lenders set their own. The lender sets the terms.
Financial Gift
You may be the lucky recipient of a financial donation from a qualified source or a member of your family. There are non-profit organizations that provide home buying assistance. Donors will need to provide proof that they are making a financial contribution. These funds are typically wired to settlement agent at the closing date. A signed letter from a donor may be required.
Asset Sales
You may also be able sell an appraisal asset in order to raise funds for your down payment or closing costs. Appraisable assets are those whose value can be documented by third parties. You might be able to sell an automobile loan because third parties can provide a current market valuation for the property. It is important to document the sale and the value. The proceeds from the sale must be matched with a deposit into an account that you own.
You can tap into any of these sources. Talk to your loan officer if you have any questions and work out all the details before.
Original Blog: https://realtytimes.com/mortgage-advices/item/1047550-4-sources-for-down-payment-and-closing-cost-cash?rtmpage=null
