Where To Get Cash To Close
Purchasing a home is the American Dream! For most people, this will not only be the largest purchase in their lives, but also their largest indebtedness. When done correctly, it can also be one of the gateways to financial freedom. However, purchasing a home typically isn’t cheap. Not everyone has thousands of dollars laying around in their checking or savings ready to use for a home. The cash needed to close on a home can be from a multitude or sources. Here are some of the different ways you can get cash to close.
Retirement Accounts - These can be a great way to come up with your cash to close on the home. There are many different retirement accounts that can be used, but borrowing against your 401K can be one of the best ways to borrow money. You will have to pay the money back over time, but you do not incur the massive early withdrawal penalty associated with withdrawing your money out of your 401K. IRA’s can also be a good way to use your assets since there is a special provision for first time home buyers. The first $10,000 dollars you take out of your IRA can be tax free if you used to purchase your first home.
Brokerage Accounts - For those with brokerage accounts like Robinhood or WeBull,, you can sell some of your stocks and bonds to get cash out. We will just need documentation to paper trail where the funds to close are coming from.
Down Payment Assistance Programs - Another way to get cash to close while not using assets you own would be from a down payment assistance program. Usually these are local/state/federal programs or grants that help first time home buyers or low income earners get their foot in the door. Most of these programs have many hoops to jump through, so talk with your independent mortgage broker about options that you may be eligible for.
Gift Funds - Gift funds are a fantastic way to get money to cover cash to close without having to come from your own pocket. Now, these funds do have to come from a blood relative (mom/dad/sister/brother/aunt/uncle/etc) and the underwriter will want to source where these funds are coming from. If you have questions about whether your gift funds are acceptable or not, please feel free to reach out and ask questions!
Seller/Realtor/Lender Concessions - Now you may not be aware of this but you can also get money from the seller, lender, and the realtor via concessions. This should not be the first place to get your cash to close, as in this sellers market, trying to get concessions makes your offer less enticing. However, they are an option to pay for your closing costs, especially if you are short a couple thousand dollars on your cash to close. We can also take a slightly higher interest rate and the lender will pay you cash for doing so. Realtors can do a similar thing to benefit their buyers or sellers and give concessions to help the transaction go through. Would you rather make a little bit of something or a lot of nothing?
Sell or Refinance An Asset - For those who have assets like a car, truck or boat but not a lot of cash on hand, you could cash out and refinance your asset to pay for your closing costs on your home. We’ve used this several times with asset rich, cash poor clients and it’s worked wonders!
If you are interested on how to find cash to close or have any questions regarding the mortgage process, please call us at Chissell Mortgage Group at 727-376-6900.
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