Are you planning to invest in a home this year? It is a huge and expensive decision, and before you can make your dream come true, you need to come up with a down payment first. If you need help, here are 4 ways to borrow down payment for your home.
1. 401(k) Retirement Plans or Liquid Assets
Many 401(k) plans provide special borrowing provisions that allow you to pay the amount borrowed with preferential terms. Even better, some 401(k) plans even allow you to avoid penalties and restrictions for first-time buyers. Every 401(k) plan is different so check with your Human Resources Department for details. If you have liquid assets, you can use them to take out a loan too.
2. Home Equity Line of Credit
If you already own a home and are looking to buy a second home, you can borrow down payment from a home equity line of credit. This option is available to you if your income and debt picture supports repayment of the line of credit as well as other miscellaneous costs like tax insurance and homeowner association fees.
3. Cash-out Refinancing
If you are planning to move, another way to borrow down payment is to leverage the value of your current home. This process is known as cash out refinancing and typically, it can provide you with money equal to up to 80% of the value on your current home. The rate is a bit less if the home is a rental property (70%) or a second home (75%). Talk about your options with a qualified loan officer.
4. Personal Loan
If you have a good financial standing, you may take out a personal loan. Look through different bank offers and choose the best rate. Submit all the documents required and wait for bank approval.
