I would like to buy a house. I'm a first time home buyer and have some questions regarding down payment assistance.
Can I get real down payment assistance? Or should I try to use my 401k, for my down payment?
Hello and thank you for visiting my website. Since you did not leave your email, I'm not sure you will be notified of my answer. But, here goes for the benefit of my readers.
Down payment assistance is really kind of a misleading statement. It sounds like you will be getting some money to help you, but that is not really the case.
Now grants are something totally different. Although hard to find let alone get one of them, a grant is a gift of money to help you buy a house. There are many different sources for these. Feel free to visit my first time home buyer grants page for a further explanation on these.
You ask the question about using your 401K as your down payment money. Since this is a loan that you have to pay back, you must include it on your loan application and it must get figured into your debt to income ratio.
So the real answer, down payment assistance is just a fancy way to build the down payment into your loan so you end up borrowing the money anyway. If you can get a real grant, then that would be great.
If not, then the 401K loan to be used for your down payment would end up costing you much less in the long run since it would be a short term loan.
If you went the route of using the down payment assistance, this would be added to your mortgage balance and the interest you pay over 30 years would be much more than what you pay on your 401K.
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