If I have no debt, does it matter if I borrow from my C U for my down payment? All bills will then total around $1500 a month mortgage included

Asked by Fungirl, Washington, DC Sun Nov 28, 2010

Ok. First with my income I have been pre-approve for $174,000 FHA loa. It took me almost 2 yrs to save for my down payment. Then I had 2 emergency situations where I had to use the majority of what I was saving for my town house. My plan for 2010 was to be in my townhouse by Xmas but now I can't do that because I am way short for my down payment. Last month I paid off every credit card I had, cut the card up and close the account up with acception of one. I kept that 1 card because it has the highest limit. Now my to DTI is only $25.00 a month. My inc. monthly after everything is deducted is $2,600. The 2 homes I have been keeping my eye on are in Cap. Hgt., Md. One is a forec. for $99.900 the other is right around the corner same area not a forec. and it is listed for $135,000. I don't want to wait 2 more yrs. I thought about just going to the C U and borrowing $5K. I don't have any debt to income $25.00 a month so what difference would it make. House in price range. Don't want to mis

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Myra Gouger, Agent, Las Vegas, NV
Sun Nov 28, 2010
First off, you can't borrow for the down payment for a home purchase. Here are some things you can do though: anyone in your family can make you a gift of this money. That is allowable. A gift letter is necessary. Also if you have a 401K program, there is a quirk in the law that allows you to borrow from your 401K to purchase a home. There is no penalty for borrowing for a home and there is no 90 day timeline to pay it back. So, check and see if you have a 401K program at work and see if it contains at least enough for the downpayment of the home and anywhere from 3-5% of the gross purchase for closing costs. You will also need money for a home inspection and an appraisal. So if you are able to borrow from the 401K figure out your costs very carefully before you borrow. You have to show your real estate purchase agreement to the administrators of the 401K. Usually it takes 3 days to get the money. I hope this advice helps you. It is a great feeling to have a home of your own.
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Ariana Loucas, Agent, National Harbor, MD
Sun Nov 28, 2010
Dear Fungirl,
A few things. One you shouldn't close the credit card accounts. The length of time of a particular line of credit helps boost your score. Not using it or using it for gas and paying off each month is a better strategy. Secondly, borrowing money to buy a home, IF you don't have to pay it back is a better option. Programs like NACA, or CDA is a better route. You really should check with your loan officer before doing ANYTHING revolving credit. I have a real estate and mortgage background and the smallest action on your part could change your qualifing scenario drastically. Hope this helps.

Ariana Loucas
Keller Williams Realty Centre
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