If you are interested in buying a home, then you are aware that having a sizable down payment is essential. It is a one-time payment made towards the price of the home, and is understood as a percentage of the total cost. For example, paying $20,000 on a $200,000 home is a 10% down payment. Putting down a large sum means that the amount that you will have to borrow in the form of a home loan is reduced, as is the amount of interest you will end up paying over the life of the loan. If you have financial worries and want to know how to make money fast to increase the size of the down payment you can make, this article offers several suggestions.
Make Your Money Work For You
You may already have additional funds at your fingertips and have not realized it. If you have a traditional or Roth IRA, you are permitted to withdraw up to $10,000 without paying a penalty fee. This is only for first-time homebuyers. Keep in mind that if the account is a traditional IRA, you will still have to pay income tax on the amount; however, a Roth IRA contains previously taxed funds and you will not incur any additional fees. Your significant other can withdraw up to $10,000 from their IRA account as well, giving you as much as $20,000 toward a down payment or closing costs.
You are also permitted to borrow money from your 401(k), but this is only a loan. Your retirement account is structured so that any money you take out has to be paid back. The money in your account accrues through pre-taxed contributions from you and possibly your employer. However, any amount that you pay back will be with your taxed income. So essentially, you are paying a fee for borrowing against your 401(k). This option is not available to everyone. Financial advisors will prevent you from accessing this money unless you can prove that your financial options are limited. Additionally, the amount you can borrow depends upon the way that your 401(k) is structured, but can be up to $50,000.
Remember all of those birthdays and holidays where your grandparents gave you savings bonds instead of toys? Check to see if the bonds have reached their maturity date. Depending upon the type of savings bond, this could be six months or several years. The bonds then continue to earn interest for up to 30 years. To cash the bond, you can either bring the documents to a local bank, credit union, the nearest Federal Reserve Bank, or seek additional assistance through TreasuryDirect, a website run by the Department of the Treasury.
Look through your personal property for valuable items. Maybe you have a laptop or tablet you no longer use that could be sold for a few hundred dollars. Or, maybe you inherited some jewelry or collectors items from a relative. Instead of letting these items collect dust, turn them into cash that you can put towards a down payment. There are plenty of online auction and secondhand retailers that you can use to sell your items. You could also hold a garage sale. Plus, once you find the home of your dreams and move in, you’ll have less to pack.
Financial Assistance Programs
There are many grants, subsidies, and other assistance programs available through local and national organizations. These are often available for first-time homebuyers, veterans, low-income individuals, houses in certain neighborhoods, and for individuals who do not qualify for loans. For example, in California, there is a grant program that offers financial assistance to homebuyers who need additional funding for their down payments. Individuals must have a qualifying income, have a FICO credit score of at least 640, and the home must be their primary residence. However, they do not need to be first-time homebuyers. The grant can be up to 5% of the loan amount. So, if you intend to take out a $250,000 loan, the program will provide as much as $12,500 in assistance. Contact the housing counseling agency in your state and speak with a representative who can answer your questions.
Sometimes, making additional money to put towards a down payment is a simple as just asking. Speak with your family about a monetary gift. Depending upon current IRS guidelines, you can receive a financial gift of up to several thousand dollars without the amount being taxed. Just make sure to ask an accountant about IRS regulations so that you follow the tax rules. You could also meet with your employment supervisor and ask for a raise. When you speak with him or her, focus on your accomplishments and not your financial need.
Better Financial Practices
Receiving financial assistance may be helpful, but it is always best to establish good financial practices. Start being more responsible with your money and you will be better off in the long run. The first step towards a better financial future is to begin paying off your debts. If you have money on credit cards, you are paying money in interest each month. If you have money on more than one card, start with the card that has the highest interest rate and pay that one off first before working you way to the next one. Of course, make sure to pay the monthly minimum balance on each card, so that you don’t incur additional fees, but try to pay more than the minimum if possible.
Speak with a financial counselor about creating a savings plan. They will look over your current income and debts and help you figure out a way to start saving each month for a down payment. They may suggest cutting back on extra items like eating at restaurants, going to the movies, and buying clothes. Any expense that is not necessary can be cut as a way to save for your better financial future.
If saving a bit each month and working towards a debt-free future is not enough, consider getting an additional job. If there are few employment opportunities in your area, consider working odd jobs. Through a temporary employment agency or a day laborer meeting location, you can find work in construction, office administration, washing cars, yard work, and much more. Having a part-time job as a secondary form of income could help you to save towards that down payment much quicker.
So, if you are looking to make money fast, there are many options available. It is as simple as making your money work for you, seeking out financial assistance programs, and establishing better financial practices.
If you are interested in putting this money towards buying a home, remember that you will need more than a down payment when you finalize the deal. There will also be closing costs, which could cost as much as $5,000, mortgage insurance if you can’t afford a 20% down payment, and homeowner’s insurance. Speak with your independent insurance agent about the coverage requirements for your new home, and how to best protect your new investment.
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