| One of the biggest hurdles to buying your first home | | | | couple of ways you can go about the process. The |
| is coming up with the down payment. Alas, you may | | | | first is to simply save up money over time. The |
| already have it and not even realize it. | | | | problem, of course, is this takes time. You can also |
| Long ago, you needed twenty percent of the value | | | | borrow money from family and so on, but I want to |
| of the home you were interested in as a down | | | | focus on a lesser-known option. |
| payment. On a $300,000 home, that equated to a | | | | If you are a salaried employee, your employer may |
| whopping $60,000. As you can guess, few people | | | | offer you a 401k program. You should be investing |
| could afford such a cost on a new home. The | | | | as much as possible in it given the pre-tax factor. |
| mortgage industry slowly but surely evolved a more | | | | Regardless, you should be vested in a certain amount |
| liberal attitude towards down payments. These days | | | | of the money held in the 401k. Well, guess what? |
| you need much smaller percentages of the value as | | | | You can borrow from it. In this case, you can do so |
| down payments. At the same time, prices have risen | | | | to use the money as a down payment on a new |
| dramatically, so it can be a catch-22 situation. | | | | home. |
| When you make the decision to buy a home, you | | | | When borrowing from your 401k program, it is |
| most likely will still need to come up with a down | | | | important to talk with the person in charge of it so |
| payment. Yes, there are programs that do not | | | | you can get a grasp of the rules. Generally, you can |
| require them, but they often are not good deals. The | | | | borrow up to 50 percent of your vested amount. |
| primary reason has to do with the risk of getting | | | | The money must be repaid over five years at an |
| upside down on the home. If you do not make a | | | | interest rate set for the particular plan. The |
| down payment, you have no equity in the home. If | | | | advantage of this approach is that you are paying |
| the value of the home drops, as we are seeing now | | | | yourself interest instead of a bank. |
| in many parts of the country, you suddenly can owe | | | | If you are stuck on the down payment issue, try |
| more than the home is worth. Hopefully, the value will | | | | getting creative. Take a look at your options with |
| bounce back, but it is not a good situation to be in. | | | | your retirement accounts. Often you can borrow |
| When dealing with down payments, there are a | | | | against them to get into a home. |