Sunday, December 9, 2018
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What are some sources for out-of-pocket cash to pay closing costs?

Change Dispenser Sometimes the amount of cash needed to close a sale comes as a shock to first time buyers. Taxes, recording fees, insurance premiums, pro-rated interest, escrow deposits and other expenses can easily reach into the thousands of dollars. Rather than reduce the down payment to pay these costs, many novice homebuyers have other sources of funds they might not think of using.
Here are seven to consider:
  • Gifts

  • Lenders like these best because they do not have to be repaid. Miss Manners may object, but this would be a good time to ask for cash in lieu of a birthday or wedding present.
  • Concessions

  • Ask the seller to pay some of the closing costs. You may pay more for the home, but you will have more cash to use for down payment than if you use part of your savings for settlement expenses.
  • Lender programs

  • Some lenders are willing to wrap the closing costs into the loan total, but will charge you a higher interest rate for the loan. You may be able to refinance for a lower rate later.
  • Sell something

  • Some people have sold assets like an extra car, land, or stocks to raise the extra cash for closing.
  • Housing assistance programs

  • Borrowers who meet moderate-income guidelines may be eligible for state or local loans or grants to help first-time home buyers.
  • Employer assistance

  • Many companies have housing-assistance programs available through the Human Resources department. Some firms will allow an employee to borrow against a year-end bonus.
  • Borrow from yourself

  • You may be able to take a loan out against your retirement account, life insurance or other restricted savings. You pay the interest to yourself. But be sure to repay what you borrow, since some programs have hefty fines and tax consequences if you don't.
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FIRST TIME How To Buy The Most Home For Your Money
QUALIFIED How Much House Can You Really Afford?
TIRE KICKING Secret Tests To Check A Property's Condition
LOCATION LOCATION: The Most Important Questions Every Buyer Should Ask
NEGOTIATE How To Buy The Home You Love At The Price You Want
SEARCH Quick Checklist For Finding The Perfect Home
INVEST YOUR RENT Why Pay Your Landlord's Mortgage?
MORE FOR LESS Six Tips For Getting The Best Loan
OPTIONS 10 Savvy Ways To Pay For A Home Today
SHELTER Six Little-Known Ways To Help Relatives Finance A Home
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