Buyers. Ever wondered how you might be able to come up with a downpayment to get that first house. Here are some options that might help you out. Just remember though. Call me when you are ready to find that house.
If you haven't already, you'll need to come up with cash for your down payment and closing costs. Lenders like to see 20 percent of the home's price as a down payment. If you can put down more than that, the lender may be willing to approve a larger loan. If you have less, you'll need to find loans that can accommodate you.
Various private and public agencies - including Fannie Mae, Freddie Mac, the Federal Housing Administration, and the Department of Veterans Affairs - provide low down payment mortgages through banks and mortgage companies. If you qualify, it's possible to pay as little as 3 percent up front. USDA in some areas actually offers 100% financing. Taney, Stone County, and some parts of Christian and Greene County offer this type of financing. For more, check out their Web sites at Fanniemae.com or Freddiemac.com.
A warning: With a down payment under 20 percent, you will probably wind up having to pay for private mortgage insurance, a safety net protecting the bank in case you fail to make payments. PMI adds about 0.5 percent of the total loan amount to your mortgage payments for the year. So if you finance $100,000, your PMI will cost $500 annually.
Once you've considered the down payment, make sure you've got enough to cover fees and closing costs. These may include the appraisal fee, loan fees, recording fees, inspection fees, and the cost of a title search. They can easily add up to more than $3,000 - and often run to 3 to 4 percent of the mortgage amount, depending on the type of loan you get.
If your available cash doesn't cover your needs, you have several options. First-time homebuyers can withdraw up to $10,000 without penalty from an Individual Retirement Account, if you have one, though you must pay taxes on the amount, unless you replace the amount taken. This is great because you could use the $8,000 tax credit to pay it back and only be pay taxes on what you took out. You can also receive a cash gift of up to $13,000 a year (the limit for 2009) from each of your parents without triggering a gift tax.
Gift taxes are only paid by the donor if they gift you over $13,000, not the recipient. (In fact, if you and your spouse's parents are both well-heeled, they can give you a total of $104,000 in one year - $13,000 from each of the four parents to each of you.)
Check on whether your employer can help; some big companies will chip in on the down payment or help you get a low-interest loan from selected lenders. You can also tap a 401(k) or similar retirement plan for a loan from yourself.