Financing Tips To Help You Buy Your First Or Next Home

Posted on: 20 October 2018

A home is one of the biggest purchases you can make during your life, but it is also a smart purchase, especially when housing is a necessary expense. Fortunately, you don't have to pay for it all at once as you can finance its purchase. Additionally there are ways to offset the initial costs of a down payment and closing costs to help you more easily afford your home purchase and fit your budget. Here are some tips you can use to help you pay for the initial costs of buying a home.

Withdraw from Your IRA

If you have been investing in your pre-tax earnings with a traditional or Roth IRA, you can use some of that money to help you pay your house down payment. Depending on the type of IRA you have and how long you have contributing to the account, you can withdraw up to $10,000 of your earnings tax-free and also penalty-free to buy your first home. Normally, you will have to pay an early withdrawal penalty of 10 percent and tax on the money when you withdraw early from your IRA, but in certain conditions, you can take the money out without paying any of it to fees and taxes.

Look for No-Down Financing

You most likely will need to get a bank financed mortgage to buy your home purchase, so apply for a loan with a local bank or mortgage loan officer. There are many lending programs available with variable rates, terms, lengths, and requirements for down payments.

For some mortgages you can apply and qualify for that do not require you to put a down payment or only a small down payment toward the home purchase. Keep in mind this will usually require you to pay for mortgage insurance until the balance is paid down a certain amount, but doing so can greatly reduce your upfront costs you need to have ready to buy a home. If you qualify for a VA loan through the Veteran's Administration, you can get a mortgage with no down payment and mortgage insurance premiums.

Ask for Seller Assistance

When you find a home you want to purchase, there is another option you can use to help with buying your home. Ask your real estate broker to write into your purchase offer for the seller to help you pay for some or all the closing costs for closing on the home. Closing costs can add up to several thousand dollars due at closing, which can put a dent in your home budget, and this can help immensely.

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Talking With Your Real Estate Agent About Your Needs

If you are on a budget, it can be frustrating to discuss your home needs with a real estate agent. You might find yourself stumbling over wants and needs, trying to figure out what you can get for your money. I found myself in that situation ten years ago when we bought our first home, and it was really frustrating. Fortunately, I had a real estate agent that really took the time to figure out what I wanted. After helping us to track down the home of our dreams, I decided to go into real estate for myself. I want to help other people to learn more about real estate.

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