Palatine Home Buyer's Guide Tip of the Month Illinois
Tips on Finding the Money You Need
If you already own a home, you can use the equity from the sale of that home for your down payments and closing costs. If this is your first home, savings will probably account for the largest amount of down-payment monies.
Here are other sources:
- Borrow against a life insurance policy.
- Are you slated for a raise or bonus at work? Ask your employer for a cash payment now to help toward your down payment.
- Ask your parents or other relative for a tax free "gift" for the down payment. Your mortgage company will have the form the person giving the gift must sign. The assistance needs to be considered a gift so the mortgage company does not have to count it as a debt against you thereby reducing the amount you are can borrow.
- Ask a friend or relative to act as a partner or investor in your property. In return for the cash they contribute toward the down payment, you would extend an equity share in future appreciation on the property, a percentage of the mortgage interest deduction, or both. You need to check with a tax consultant to see how this would affect you.
- If someone in your family is planning to leaving you an inheritance, maybe they would give it to you now.
- You may have some personal items you could sell to raise the money in whole or part.
- Tax refund money is a good source of down payment.
- Get a part time job for 6 months or so and apply all of the earnings to your "home fund."
- You can borrow from a pension plan or IRA. These both have tax consequences, so talk to your accountant first.
- You can sell stocks or bonds you own.
