Buyers Guide - Downpayment Sources

If your own band account isn't large enough, you have several options. For example:

• Receive a tax-free gift from your parents (or others) documented by a "gift letter" stating no repayment is required (thus your debt burden is not increased). Some lenders may require you to use some of your own money in addition to the gift.
• Borrow against a life insurance policy
• Borrow against a company pension plan
• Cash in a retirement savings plan (even though you may have to pay a penalty for early withdrawl).
• Ask for cash payment from your employer instead of next year's raise
• Use your own business as collateral.
• Team up with friends, relatives or investors as partners in return for equity in your home. (You can, if you like, buy them out later.)

Should I shop for a loan before or after I find a place to buy?

It's a good idea to let an agent help you look for financing before you find a home. We are in constant contact with many lenders, and can act as an invaluable "clearing house" of information. If you're actively house hunting but have not found the right home yet, ask the lender to do a "screening application." This details your income, debts and assets.

Knowing where you stand concerning how much money a lender will lend you (based on your income and credit rating) puts you in a good bargaining position. Sellers faced what deciding between two buyers - one who is "pre-screened" by a lender - may favor the offer of the buyer for whom getting a long is almost a sure thing.

On Your Mark. Get Set. Go!

Now that you've mapped out your strategy, dtermind what you want to lok fo in general and lined up a real estate agent, you'll want to discover all you need to know about intelligent, time-saving house hunting. That's what our next section is all about.

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