Unique Down Payment Strategy

Coming up with a down payment for a home can be a lengthy process. Most people do not realize they can use a unique down payment strategy to free up cash.

Unique Down Payment Strategy

Making a down payment on a house purchase can be a breeze or incredibly challenging depending on the type of loan you are pursuing. Depending on your credit and available loan programs, you might be able to get away with a no down payment loan, three percent, ten percent, twenty percent or twenty five percent. The higher the percentage, the more difficult it can be. A twenty percent down payment on a $300,000 loan is $60,000, a figure most people are going to have great trouble nailing down.

If you have to put a sizeable chunk down, your finances can be strained to the maximum trying to come up with it. Ironically, you may not be aware you have the money available to you in a unique place. If you participate in a qualified retirement plan, things could be looking up.

The legislation establishing the existence of 401ks contains some surprising clauses. Specifically, there is language that allows you to take loans from the retirement plan. Generally, the loan amount can equate to fifty percent of your vested interest.

Americans are horrific savers with one exception. They tend to stuff money into retirement plans because it makes sense to since the contributions are pre-tax. If you have been doing so for a number of years, you may have tens or hundreds of thousands of dollars in your account. Welcome to your down payment funding account.

Taking a loan from your retirement plan is not a slam dunk decision. Repayment issues have to be analyzed. Typically, these loans have to be repaid within five years and interest is added as well. If you are considering a retirement down payment plan, make sure you talk with the individual in charge of the plan regarding how the process works.

Raynor James is with the FSBO site - FSBO America - homes for sale by owner.