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