Using Retirement Savings for Your Down Payment by Dan Lewis

One of the biggest hurdles to buying your first home is coming up with the down payment. Alas, you may already have it and not even realize it.

Long ago, you needed twenty percent of the value of the home you were interested in as a down payment. On a $300,000 home, that equated to a whopping $60,000. As you can guess, few people could afford such a cost on a new home. The mortgage industry slowly but surely evolved a more liberal attitude towards down payments. These days you need much smaller percentages of the value as down payments. At the same time, prices have risen dramatically, so it can be a catch-22 situation.

When you make the decision to buy a home, you most likely will still need to come up with a down payment. Yes, there are programs that do not require them, but they often are not good deals. The primary reason has to do with the risk of getting upside down on the home. If you do not make a down payment, you have no equity in the home. If the value of the home drops, as we are seeing now in many parts of the country, you suddenly can owe more than the home is worth. Hopefully, the value will bounce back, but it is not a good situation to be in.

When dealing with down payments, there are a couple of ways you can go about the process. The first is to simply save up money over time. The problem, of course, is this takes time. You can also borrow money from family and so on, but I want to focus on a lesser-known option.

If you are a salaried employee, your employer may offer you a 401k program. You should be investing as much as possible in it given the pre-tax factor. Regardless, you should be vested in a certain amount of the money held in the 401k. Well, guess what? You can borrow from it. In this case, you can do so to use the money as a down payment on a new home.

When borrowing from your 401k program, it is important to talk with the person in charge of it so you can get a grasp of the rules. Generally, you can borrow up to 50 percent of your vested amount. The money must be repaid over five years at an interest rate set for the particular plan. The advantage of this approach is that you are paying yourself interest instead of a bank.

If you are stuck on the down payment issue, try getting creative. Take a look at your options with your retirement accounts. Often you can borrow against them to get into a home.


About the Author
Dan Lewis is with Great Western Mortgage - California mortgage brokers providing California home loans.

Save for Retirement

by Martin Lukac


Save money for retirement at an early age. The earlier you start saving the better it is for you as we are all getting older everyday.

There are many ways to save money for retirement so be sure you find a plan that will benefit you and your loved ones. Do some researching before deciding on the plan you want to invest in; be sure that you are earning interest on your investments at the highest rates possible.

Deciding on the amount you want to invest each month by calculating the number of years until you plan to retire can be done from using the retirement calculator on the Internet. You can also get the percentage rates from your investor; as well, they will be glad to help you in making your decisions.

Saving for you and your loved ones after retirement by investing is one of the most effective ways to help you when you decide that your working days are over.

You can invest into different corporations like Edward and Jones or Mutual Funds along with many others.

Using the 401K retirement plan is the easiest and most effective retirement's plans available. Your work employer contributes up to a certain percentage to match what you have taken from your check. As your money accumulates it, will increase as the stocks go up? You will draw interest on your investments as well.

When you invest into a 401K program the money you have taken from your check will be deferred from having to pay taxes on it. Your money will stay tax-free until you remove the program. If you draw the money out early, you have to pay a penalty so once you invest into your 401K try to leave it there. You can borrow on it after you have a certain amount in but plan on paying a high interest rate. There is an advantage to this because the interest goes back into your investments giving you the interest as well.

You can invest your own money by putting it into CD's. The CD rates vary according to the number of years or months that you chose to leave it there. The longer you invest your money in CD's the more interest you will receive and than the interest can be rolled back into the money to receive interest on the interest money you've already earned.

Set up an IRA plan with your bank investing your money to it for retirement as well. You can have a portion or all of your income tax rolled over to your IRA plan each year. Your interest that you earn can be rolled over here as well to earn more interest.

Retirement plans can earn you money to make more money. You can get advice from your local investors to find the best plan for you at the highest rates of interest.

Plan your savings for retirement early to get the best rates and investments advantages as possible. You and your family will benefit later in life.


About the Author
RateEmpire.com, http://www.RateEmpire.com an Internet consumer banking marketplace. RateEmpire.com is a destination site of personal finance, investing, taxes and mortgage rates. RateEmpire.com also operates a financial portal #1 American Financial, found at http://www.1AmericanFinancial.com and search engine marketing website http://www.EnginePromoter.com