When you first discuss your home buying intentions with a loan officer or mortgage lender, one of the first questions they’re going to ask is “how much of down payment will you be contributing and where are you getting the funds from?” Many home buyers today believe that a 20% down payment is required. Everyone has a different requirement and available funds for down payments. Thus, there are a variety of options for low- or no-down payment financing options available. You’ll want to discuss these with your mortgage lender and determine which one will be right for you.
Source Of The Funds For Down Payment
Once you’ve determined how much you’re going to put down, you’ll need to identify the source of those funds. Here are 5 sources to consider for your down payment:
- 401k or investment accounts – if you have a 401k or investment account, you may be able to use them towards the purchase of a home. Just be aware that it could take longer to access these funds, so you should familiarize yourself with how and when they can be used. Since there could be tax or other financial implications involved with these types of funds, it’s recommended that you talk to a consultant or financial advisor first.
- Down payment assistance programs – eligible home buyers have the option of getting down payment funds from local and state government backed assistance programs as well as programs sponsored by other organizations. The funds could be distributed in the form of grants or low-interest second loans.
- Gift funds from eligible donors – depending on the type of loan that you’re getting, certain gift funds can be used towards your down payment. Most lenders will require that the funds are a true gift and that there are no expectations of the money being repaid. Some sources will not be eligible such as gifts from builders or realtors.
- Savings accounts – if you’ve been saving up to buy a home, this is a great place to start. However, be sure that you exclude any funds that are part of your financial goals or are being used for other purchases.
- Tax refunds – another possible source of down payment funds are tax refunds. If you’re getting a refund, place it in a separate savings account that is dedicated to your home purchase and nothing else. Just keep in mind that avoiding temptation and not using these funds for something else can be difficult for some individuals.
Apply For a Mortgage at Florida State Mortgage Group
If you’re interested in learning more about options for down payment funding, contact Florida State Mortgage Group, Inc. today at (954) 359-3000. Our business representatives are here to help you take the right decision on your house mortgage.