Monday, December 10, 2012

3 Ways To A Down Payment If You Don't have One

3 Ways To A Down Payment If You Don't have One...

Are you short a down payment for your home purchase in Phoenix Scottsdale? And Phoenix Scottsdale real estate values are on the increase and you don't want to miss on the large capital appreciation that is currently taking place?

Or you want to keep up with your friends and relatives? Well, don't give up... just yet. Here are 3 approaches  that could get you quickly into your new home.

1. Gifting. Did you know that gifting from a loved one as a down payment is allowed in your next home purchase? Gifting is allowed for purchasing a primary residence or second home – all loan programs allow gifts towards down payment and closing costs with slightly different rules.

Who’s an acceptable donor? A gift can be a relative – a spouse, child or any other individual related to the individual by blood, marriage or legal guardianship. If the gift comes from a relative or domestic partner, fiancĂ© or fiancĂ©e, who has lived with the borrower for at least 12 months, these funds may be used to satisfy the minimum borrower contribution. So documentation is very important and the transfer of gifts funds can be a major stumbling block if not done correctly.

2. Cash value out of your insurance policy. For example, you can take out cash form your Universal Life Insurance policy with an Option B plan without affecting the initial amount of the life insurance amount. For example, a $200,000 Life Policy with $20,000 cash value for  $220,000 of total of life insurance. Taking out a policy loan for $15,000 which would reduce your life insurance to $205,000 and would give you the money needed for the down payment. You don't have to pay it back, but this small amount may be taxable but a low amount on the total income.

3. Seller closing costs. In a real estate transaction, you can write in the contract for seller closing costs up to 6% credited to you the buyer depending on your lender financing your purchase. Usually, this can be easily negotiated with the seller.

So if you need assistance on any of those 3 Ways To A Down Payment If You Don't have One in your next home purchase in Phoenix Scottsdale, it is probably best that you call me before your next home purchase so that we can plan this out the right way right from the beginning.

Richard Bazinet, Realty ONE Group, Phoenix Scottsdale Real Estate.