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Ppork13
LIF Zygote
Member since 6/15 18 total posts
Name:
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Down Payment Assistance
Does anyone have any experience with down payment assistance? I'm a first time home buyer, and it's hard coming up with that much money to lay out! I was going to borrow from my 401K, but was curious if there were other options. TIA~
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Posted 7/9/15 1:00 PM  |
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Prudential Douglas Elliman Real Estate
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blu6385
Member since 5/08 8351 total posts
Name:
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Re: Down Payment Assistance
we just put 3% down and put our closing costs into the loan . we did a FHA loan. our house also wasn't very expensive compare to what I feel most people pay for a house.
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| Posted 7/9/15 1:19 PM |
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PhyllisNJoe
My Box Is Broken
Member since 6/11 9145 total posts
Name:
Phyllis
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Re: Down Payment Assistance
Posted by blu6385
we just put 3% down and put our closing costs into the loan . we did a FHA loan. our house also wasn't very expensive compare to what I feel most people pay for a house.
This exactly
You will have PMI though. I know the rules have changed reguarding PMI. I think it's now for lifetime of loan. You'd need to find out exactly how it works now from a mortgage broker
When we did it, we have PMi for 5 years and then it comes off.
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| Posted 7/9/15 2:05 PM |
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LSP2005
Bunny kisses are so cute!
Member since 5/05 19458 total posts
Name:
L
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Re: Down Payment Assistance
You are not going to like my answer, but if you can't come up with a down payment, you can't afford a home. Make a list of all of your income and expenses. See where you can cut your expenses to save money. What happens if you have a home emergency, where will you get the money to pay for it? A 401k loan is not a good idea. You either need a second job, a gift from a family member, and or cut your expenses.
FHA loans have pmi for the life of the loan now, so you would have to get a new loan to remove it when you have enough equity.
Can you live with family to help come up with a down payment?
Message edited 7/9/2015 5:47:21 PM.
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| Posted 7/9/15 5:45 PM |
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Re: Down Payment Assistance
Its never a good idea to borrow from a 401K to buy a home. I also agree w the above- if you dont have the 20% downpayment saved up, you probably cant afford to buy right now. The RE market is still sluggish on LI (from what I am experiencing, some towns may not be) and there are so many unexpected costs of home ownership.
I really would wait to save up more $ or consider a cheaper property (co-op/condo) where you can start building equity now and then several years from now, upgrade to a SFH.
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| Posted 7/10/15 1:51 AM |
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jellybean78
:)
Member since 8/06 13103 total posts
Name:
Mommy
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Re: Down Payment Assistance
Posted by EclecticEsq10810
Its never a good idea to borrow from a 401K to buy a home. I also agree w the above- if you dont have the 20% downpayment saved up, you probably cant afford to buy right now. The RE market is still sluggish on LI (from what I am experiencing, some towns may not be) and there are so many unexpected costs of home ownership.
I really would wait to save up more $ or consider a cheaper property (co-op/condo) where you can start building equity now and then several years from now, upgrade to a SFH.
I would agree if we lived in another part of the country where homes were $100-200k but in LI with the average home in a decent neighborhood costing $300-400k I don't think this applies. Plenty of people buy with less than 20% down and do just fine.
OP I would look into FHA loans or even 5% down conventional loans. Co-ops on the island can be hard to unload and from what I've seen most condos on the island cost almost as much as a starter home..so personally I would avoid those. Good luck!
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| Posted 7/10/15 12:06 PM |
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LSP2005
Bunny kisses are so cute!
Member since 5/05 19458 total posts
Name:
L
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Re: Down Payment Assistance
Posted by jellybean78
Posted by EclecticEsq10810
Its never a good idea to borrow from a 401K to buy a home. I also agree w the above- if you dont have the 20% downpayment saved up, you probably cant afford to buy right now. The RE market is still sluggish on LI (from what I am experiencing, some towns may not be) and there are so many unexpected costs of home ownership.
I really would wait to save up more $ or consider a cheaper property (co-op/condo) where you can start building equity now and then several years from now, upgrade to a SFH.
I would agree if we lived in another part of the country where homes were $100-200k but in LI with the average home in a decent neighborhood costing $300-400k I don't think this applies. Plenty of people buy with less than 20% down and do just fine.
OP I would look into FHA loans or even 5% down conventional loans. Co-ops on the island can be hard to unload and from what I've seen most condos on the island cost almost as much as a starter home..so personally I would avoid those. Good luck!
there is a difference between using an fha loan and borrowing from your 401k. Don't borrow from your 401k. How are you going to retire?
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| Posted 7/10/15 2:45 PM |
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dlj97
LIF Adult
Member since 7/10 4399 total posts
Name:
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Re: Down Payment Assistance
Posted by LSP2005
Posted by jellybean78
Posted by EclecticEsq10810
Its never a good idea to borrow from a 401K to buy a home. I also agree w the above- if you dont have the 20% downpayment saved up, you probably cant afford to buy right now. The RE market is still sluggish on LI (from what I am experiencing, some towns may not be) and there are so many unexpected costs of home ownership.
I really would wait to save up more $ or consider a cheaper property (co-op/condo) where you can start building equity now and then several years from now, upgrade to a SFH.
I would agree if we lived in another part of the country where homes were $100-200k but in LI with the average home in a decent neighborhood costing $300-400k I don't think this applies. Plenty of people buy with less than 20% down and do just fine.
OP I would look into FHA loans or even 5% down conventional loans. Co-ops on the island can be hard to unload and from what I've seen most condos on the island cost almost as much as a starter home..so personally I would avoid those. Good luck!
there is a difference between using an fha loan and borrowing from your 401k. Don't borrow from your 401k. How are you going to retire?
You pay back the loan! We are likely going to borrow from our 401k when we find a house, and the loan repayment is the same amount as PMI - why wouldn't I pay the money back to myself instead?
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| Posted 7/10/15 2:52 PM |
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Re: Down Payment Assistance
Posted by dlj97
You pay back the loan! We are likely going to borrow from our 401k when we find a house, and the loan repayment is the same amount as PMI - why wouldn't I pay the money back to myself instead?
You can do what you wish, but the general consensus from all financial gurus (I'm a big fan of Suze Orman) do not recommend it. For starters, a lot of things can happen after you borrow from a 401K that could impact repayment. Such as losing your job or any emergency where you might find yourself unable to pay it back. Theres also the TAX implications of it. You may have extra restrictions on accessing funds, e.g. if your employer has a provision that requires immediate repayment upon quitting. One of our couple friends bought a home in Staten Island by borrowing as much as 20% from their 401K and they got burned badly when the husband was laid off 9 months later (and she was pregnant!) and the IRS then slapped them with a huge tax bill. To say they ate Ramen Noodles for a few months would be an understatement. All because they rushed to buy a house they really weren't ready to afford.
Its just better not to put yourself in that situation, thats all. Plus as someone noted above, PMI doesnt always come off after X years. I refinanced an investment property in Queens under HARP 2.0 and still have to carry PMI for the ENTIRE length of the loan which pisses me off to no end, and I have only myself to blame because I bought a condo 10 years ago with just under 20% down. I will be paying PMI for the rest of my life until I either dump the property or refinance with no PMI. PMI is just evil! I will never make that mistake again! 
Food for thought:
http://www.investopedia.com/articles/retirement/06/eightreasons401k.asp
Message edited 7/10/2015 4:25:55 PM.
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| Posted 7/10/15 3:17 PM |
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PhyllisNJoe
My Box Is Broken
Member since 6/11 9145 total posts
Name:
Phyllis
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Re: Down Payment Assistance
Posted by LSP2005
You are not going to like my answer, but if you can't come up with a down payment, you can't afford a home. Make a list of all of your income and expenses. See where you can cut your expenses to save money. What happens if you have a home emergency, where will you get the money to pay for it? A 401k loan is not a good idea. You either need a second job, a gift from a family member, and or cut your expenses.
FHA loans have pmi for the life of the loan now, so you would have to get a new loan to remove it when you have enough equity.
Can you live with family to help come up with a down payment?
I have to disagree. We can 100% afford our home. But just didn't have the almost 70k to put down. We did 3.5 down (the least you could) so we had plenty of $& in the bank for repairs (which always come up) and rolled our closing costs into mortgage. Our salaries qualified us for much more then our mortgage, it was just that nut that was impossible to attain. Not many people have that kind of $$ laying around. Especially those who support themselves and pay for their own weddings, cars, etc.
To the OP, don't be discouraged. It IS possible to do it. It's just not as easy.
Message edited 7/10/2015 3:49:26 PM.
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| Posted 7/10/15 3:48 PM |
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LSP2005
Bunny kisses are so cute!
Member since 5/05 19458 total posts
Name:
L
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Re: Down Payment Assistance
Posted by PhyllisNJoe
Posted by LSP2005
You are not going to like my answer, but if you can't come up with a down payment, you can't afford a home. Make a list of all of your income and expenses. See where you can cut your expenses to save money. What happens if you have a home emergency, where will you get the money to pay for it? A 401k loan is not a good idea. You either need a second job, a gift from a family member, and or cut your expenses.
FHA loans have pmi for the life of the loan now, so you would have to get a new loan to remove it when you have enough equity.
Can you live with family to help come up with a down payment?
I have to disagree. We can 100% afford our home. But just didn't have the almost 70k to put down. We did 3.5 down (the least you could) so we had plenty of $& in the bank for repairs (which always come up) and rolled our closing costs into mortgage. Our salaries qualified us for much more then our mortgage, it was just that nut that was impossible to attain. Not many people have that kind of $$ laying around. Especially those who support themselves and pay for their own weddings, cars, etc.
To the OP, don't be discouraged. It IS possible to do it. It's just not as easy.
I did not say, don't use an FHA loan, I just said don't dip into your 401k for the down payment. Those are two very different situations. Of course, coming up with 20% is ideal! but if an FHA loan gets you into a house and that is less than rent! great go for it. But, op should be able to save 3.5% plus some savings beyond her 401k. If she can't do at least that, then she really should not be purchasing a home yet.
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| Posted 7/10/15 5:17 PM |
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PhyllisNJoe
My Box Is Broken
Member since 6/11 9145 total posts
Name:
Phyllis
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Re: Down Payment Assistance
Posted by LSP2005
Posted by PhyllisNJoe
Posted by LSP2005
You are not going to like my answer, but if you can't come up with a down payment, you can't afford a home. Make a list of all of your income and expenses. See where you can cut your expenses to save money. What happens if you have a home emergency, where will you get the money to pay for it? A 401k loan is not a good idea. You either need a second job, a gift from a family member, and or cut your expenses.
FHA loans have pmi for the life of the loan now, so you would have to get a new loan to remove it when you have enough equity.
Can you live with family to help come up with a down payment?
I have to disagree. We can 100% afford our home. But just didn't have the almost 70k to put down. We did 3.5 down (the least you could) so we had plenty of $& in the bank for repairs (which always come up) and rolled our closing costs into mortgage. Our salaries qualified us for much more then our mortgage, it was just that nut that was impossible to attain. Not many people have that kind of $$ laying around. Especially those who support themselves and pay for their own weddings, cars, etc.
To the OP, don't be discouraged. It IS possible to do it. It's just not as easy.
I did not say, don't use an FHA loan, I just said don't dip into your 401k for the down payment. Those are two very different situations. Of course, coming up with 20% is ideal! but if an FHA loan gets you into a house and that is less than rent! great go for it. But, op should be able to save 3.5% plus some savings beyond her 401k. If she can't do at least that, then she really should not be purchasing a home yet.
That I can agree with But with reading your post, the beginning was about if you don't have enough of DP, you can't afford it.
The 401K is a hot topic. I know people who have gone into it but it's true, unless it's a dire emergency, you shouldn't touch that.
Message edited 7/10/2015 5:25:52 PM.
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| Posted 7/10/15 5:23 PM |
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MrsM84
LIF Adult
Member since 2/13 2352 total posts
Name:
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Down Payment Assistance
I have to say that for young couples/newlyweds here on LI, its very hard to save up a 20% down payment. As someone else pointed out, houses here are ridiculously priced, and even ones in the 300-400K range sometimes need a significant amount of work (and I'm not talking cosmetic work - "I hate this kitchen", "The bathrooms really need to be updated"). While there are options to save up an 80K down payment, they are not always feasible or desirable. Living with your parents to save money is great but people's parents are unfortunately deceased, some parents don't want their 20 or 30 something year old children and significant other/spouses living with them, or you just may not want to live with your parents. If you are living on your own, you're paying rent, which is also expensive here on LI. If your parents saved up money to give you a good chunk of your down payment as a gift, then great, but I have to think that's rare. DH and I both make a decent amount of money and did the FHA route for a home loan. To say that if you can't save up the full 20% down payment that you shouldn't purchase a house is not true IMO. Will it make your life easier and your finances more secure? Yep, sure it will, but not everyone is in that position. You need to down with someone who will really be able to crunch numbers for you, have them overestimate the cost of things for a "worst case scenario", and see if you are financially comfortable enough to move forward.
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| Posted 7/10/15 7:19 PM |
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Re: Down Payment Assistance
Contrary to what one would believe reading LIF, most of the buyers I work with do not have 20 percent down. Many are FHA buyers (sometimes buying homes in the $500K to $600K range) and it's also very popular to do a 5 percent down conventional loan, if a buyer can qualify. There are also buyers who do 0 percent down VA loans, and 3 percent down Sonyma loans. It's not one-size fits all.
These buyers have excellent jobs -- cops, tenures teachers, etc. -- but may not just have the cash at hand. Lack of a 20 percent down payment does not necessarily mean a buyers isn't financially ready to buy. It may, but it may not. There are also financial benefits that come with owning a home (tax benefits, for example), and of course, non- financial benefits.
Also, as others have mentioned, sellers concessions, which allow a buyer to roll in all or some of their closing costs into the loan, are also popular. But you have to be aware that rolling in closing costs basically inflates the purchase price... If it's a $400K house and you roll $20K in for closing costs, the contract price is $420K and your down payment is based on that, the house must appraise for that, etc. The appraisal factor can be a concern for the seller if you must get the full seller's concession to make the deal work.
But the bottom line is, everyone's situation is different. I don't believe that one must have 20 percent down to buy a house and not bring on financial strain. If that were the case, there would be a lot fewer LI homeowners, but it's important to consult the appropriate experts -- mortgage loan officer, accountant, financial advisor, etc. -- to ensure you are making the most advantageous decisions for you.
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| Posted 7/11/15 1:03 PM |
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BabyBoy
is Skylar Elizabeth
Member since 5/05 4189 total posts
Name:
Tom
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Down Payment Assistance
As for DW and I, our 401K were not large. We each borrowed 6k and combined with our savings, we put 3% down for FHA to get into our house. Because of the house we bought, it was well below market value (short sale) and so far is our biggest investment.
To each their own but a house an investment too..i'm not maxing out my 401K, i have a kid and we will find a way to reitre, kid to go to college and everything. We wanted a home and a free loan on your 401K was well worth it. In the future hopefully when we have more money and less bills, we can save more to secure our futures. There are other factors to way 401k borrow in my mind is a plus.
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| Posted 7/12/15 3:59 PM |
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jellybean78
:)
Member since 8/06 13103 total posts
Name:
Mommy
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Re: Down Payment Assistance
Posted by dlj97
Posted by LSP2005
Posted by jellybean78
Posted by EclecticEsq10810
Its never a good idea to borrow from a 401K to buy a home. I also agree w the above- if you dont have the 20% downpayment saved up, you probably cant afford to buy right now. The RE market is still sluggish on LI (from what I am experiencing, some towns may not be) and there are so many unexpected costs of home ownership.
I really would wait to save up more $ or consider a cheaper property (co-op/condo) where you can start building equity now and then several years from now, upgrade to a SFH.
I would agree if we lived in another part of the country where homes were $100-200k but in LI with the average home in a decent neighborhood costing $300-400k I don't think this applies. Plenty of people buy with less than 20% down and do just fine.
OP I would look into FHA loans or even 5% down conventional loans. Co-ops on the island can be hard to unload and from what I've seen most condos on the island cost almost as much as a starter home..so personally I would avoid those. Good luck!
there is a difference between using an fha loan and borrowing from your 401k. Don't borrow from your 401k. How are you going to retire?
You pay back the loan! We are likely going to borrow from our 401k when we find a house, and the loan repayment is the same amount as PMI - why wouldn't I pay the money back to myself instead?
Exactly. There is a HUGE difference between taking a loan from your 401K and withdrawing from it. I wouldn't advise anyone to withdraw money from their 401K unless they were in a dire situation (foreclosure, etc) and there was no other option however, when you take a loan out of your 401K you are paying back yourself. And yes the anti 401K borrowing police will tell you that the growth of return may have been higher if you left your money in there instead of borrowing from it but honestly that is not a guarantee either.
OP: Contrary to popular belief there are plenty of people who buy with less than 20% down and do just fine and I'm sure plenty of those people do so on LI.
Housing costs on LI are restrictive and not everyone has the ability to live with family while saving up a down payment and not everyone has a job or a SO with a job that makes 6 figures. You do what you have to do make what works from your family.
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| Posted 7/13/15 10:11 AM |
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walkintomymind
LIF Adolescent
Member since 6/10 806 total posts
Name:
Sarah
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Re: Down Payment Assistance
Look into the Sonyma loan. My husband and I got that, but there are strict guidelines to qualifying. We got about $10k in down payment assistance.
Buying a home is not one size fits all and often times for us, talking to other people made us feel like we couldn't do it!
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| Posted 7/13/15 10:44 AM |
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cets1290
LIF Adult
Member since 6/14 1051 total posts
Name:
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Re: Down Payment Assistance
Posted by LSP2005
You are not going to like my answer, but if you can't come up with a down payment, you can't afford a home. Make a list of all of your income and expenses. See where you can cut your expenses to save money. What happens if you have a home emergency, where will you get the money to pay for it? A 401k loan is not a good idea. You either need a second job, a gift from a family member, and or cut your expenses.
FHA loans have pmi for the life of the loan now, so you would have to get a new loan to remove it when you have enough equity.
Can you live with family to help come up with a down payment?
i agree, sorry... we put 20% down, but probably would have been more comfortable doing 15-18%. However, being able to completely avoid the PMI costs was worth it.
The first month or two was costly because of painting, furniture, electric upgrade, locksmith, alarm system, etc etc etc. A couple of months later, we had a plumbing issue that was about 2k, and then we had a bunch of other things happen. I would suggest saving for another year or so, so that it's not as hectic or crazy when something breaks or goes wrong. You'll feel alot less stressed and alot more "in control" of your finances that way
side note: we did the first home club though HSBC which was a SONYMA loan. We got a much lower mortgage rate through this loan program (3.125% as opposed to my sister paying 3.3% one month prior), and we were given $7,500 towards closing costs and down payment
Message edited 7/13/2015 4:23:59 PM.
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| Posted 7/13/15 4:12 PM |
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bunnyluck
LIF Adult
Member since 1/14 3196 total posts
Name:
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Down Payment Assistance
In terms of other options other then borrowing from your 401k I'm not aware of anything other than increasing your income and decreasing expenses:
Weekend job (bartend/babysit)
"Spending Diet"
Cut any unnecessary expenses
Borrowing from family
Gift of equity from seller (i.e., if buying from family)
Sellers concessions rolled into loan
Save, save, save!!
Sell any assets (anything and everything you can part with)
It's tough to buy on LI and still keep a decent cushion, but if there's a will there is a way! Good luck.
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| Posted 7/13/15 5:15 PM |
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BargainMama
LIF Adult
Member since 5/09 15657 total posts
Name:
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Re: Down Payment Assistance
Contact this place for down payment assistance. Lots of rules and stipulations, but check it out.
http://www.cdcli.org/
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| Posted 7/16/15 8:04 AM |
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dlj97
LIF Adult
Member since 7/10 4399 total posts
Name:
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Re: Down Payment Assistance
Posted by EclecticEsq10810
Posted by dlj97
You pay back the loan! We are likely going to borrow from our 401k when we find a house, and the loan repayment is the same amount as PMI - why wouldn't I pay the money back to myself instead?
Its just better not to put yourself in that situation, thats all. Plus as someone noted above, PMI doesnt always come off after X years. I refinanced an investment property in Queens under HARP 2.0 and still have to carry PMI for the ENTIRE length of the loan which pisses me off to no end, and I have only myself to blame because I bought a condo 10 years ago with just under 20% down. I will be paying PMI for the rest of my life until I either dump the property or refinance with no PMI. PMI is just evil! I will never make that mistake again!
Food for thought:
http://www.investopedia.com/articles/retirement/06/eightreasons401k.asp
For me personally, borrowing from my 401k would enable me to put 20% down and NOT pay PMI. And DH's 401k allows him to have the loan outstanding even when he leaves the firm. And our intention is to pay it back within 2-3 years. So for us, we feel it makes sense. I get everyone's situation is different.
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| Posted 7/16/15 12:51 PM |
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angelicd77
LIF Adolescent
Member since 12/13 794 total posts
Name:
Kim
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Down Payment Assistance
Our rep from our 401K company at my job told me that a first time home buyer you can take up to 10k from your 401K with no penalty.. I would look into that. We are looking to use some of our 401K to aid what we have in savings, but OP if you find any DP assistance programs please pass them my way! Id love to hear of them as well..
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| Posted 7/16/15 5:24 PM |
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