Funding for house downpayment
I require 140K downpayment for buying house. Have the following assets (excluding 401K as I don’t want to touch it). The house price is 700K so I am paying 20% downpayment. 85K cash 25K Stock of Altaba (Yahoo) 80K mutual funds (S&P 500) 1. Can anyone advise which ones should I sell to get to 140K. 2. How much cash is REQUIRED by bank? Assume mortgage payment of $3K. 3. How much cash is RECOMMENDED?
Lenders only care about income and down payment. Ideally you have 20% plus closing costs. Keep in mind you will have to pay taxes on sold investments.
The minimum down payment depends on the property you are trying to buy and your personal qualifications (debt to income ratio and credit score mainly). It sounds like you are buying for the first time so maybe meet with a Realtor and they can put you in contact with lenders that be best suited for your particular scenario. There are sometimes incentives to purchase in certain Census Track Codes which would reduce your down payment through certain lenders. In addition to your down payment you will need closing costs, again varies by the property type and city/county mainly. If you need to talk with a couple of Realtors to make sure that you are being advices well then maybe that's a good option too.
Hate to say this but based on what you’ve provided you should not buy this home. You should be looking at something in the $350k range or keep renting a save More. Also you should not have to put down more than 10%. 20% allows you to avoid PMI. Don’t sell long term investments for a down payment.
I live in the Bay Area. Won’t get anything for $350K.
So do I. Where the heck did you find a house for $700k??? You must be way out. Antioch? Just curious. You should seriously avoid buying a place until you have significantly more saved. It’s more cost effective to rent right now. Hang tight.
Consider a loan from your 401k. You will be paying the loan back to yourself and the interest as well, and terms will be better than a HELOC. I would consider funding a part of your down payment through that. Bank will expect you you have 4-6 month of payment in your account post purchase - this really varies based on the time of the year and the bank. Use most of your cash and 401k loan and use the sticks for the rest
This. While the rest of the portfolio keeps growing the loan payback is small.price to pay. The additional 401k loan proceeds adds to your down payment and higher qualification loan balance, while the 401k loan repayment doesn’t count against you in the dti (debt to income) ratio. Also starting in 2018 if you leave your job, you may have an extended period to repay, maybe up to 18 months.
This is such bad advice. And lenders will ask whether the money was borrowed from a source such as 491k
I will buy the house surely. Don’t mind loosing potential gains in stocks.
OP, i was in the worse condition than you and still went for it and now I am so glad I did. You don't need 20% for down these days, 15% should be good enough to get decent rates and minimal PMI. That is what I have done and my PMI is <100. If PMI is not a concern for you then you can even go 10% and secure a loan.
I already have 25% for downpayment. I don’t understand why you guys want me to pay < 20%.
Because you need to keep some cash in hand for emergency and property tax which will come laters. Also a new house has other expenses too like furniture, electronics etc All in all, you need 30k after you buy your house.
Don’t buy a 700k low income housing property. You won’t be happy. It will also require many repairs
Sell all of your Yahoo stocks. Those are the most risky. Make sure you have enough money set aside for property tax, closing cost, and capital gains on your sold stock. Keep as much cash as you can, since that will be your emergency fund. I think you barely have enough. Hopefully you really like the house.
Need more info. Is 140k 10% or 20% Down payment? If it is 20% then consider taking second loan (Heloc) by reducing your first down payment from 20% to either 10 or 15% S&P has. 4-5% growth YOY. Do you see altaba grow that way? If yes the split half and half If not your choice is clear.
140K is 20% down. Why should I take loan for downpayment if I have 20% saved?
Because you will need ready cash after buying home to buy new furnitures and fix issues if there are. You ll also need them for paying property taxes Don't use all the cash you have. Take a loan instead.