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Last Updated on June 26, 2022
Purchasing a home is not as easy as it was in the past, but this should not stop you from obtaining one if you feel ready to do so. There are a few ways you can make the process more affordable so you can be in your house sooner.
Consider Selling Your Life Insurance Policy
If you have a life insurance policy you no longer need and are thinking about selling it through a life settlement, you may want to do some research on the tax implications. As with any other type of financial decision that relates to taxation, it is important to consult with a professional before making any decision. You can look at a life settlement taxation guide to get more information on selling your policy in a life settlement.
Look at Options for First-Time Buyers
If you have not purchased a home in the past, you may have more options, and you might not have to put 10 to 20 percent down. If you have served in the military, you might be able to get a VA loan that does not require anything down. And if you are buying in a rural area, you could qualify for one from the USDA. On the other hand, the FHA also offers loans with only 3.5 percent down. While many still have credit score requirements, you might be able to get a home sooner, even if you don’t have a large down payment.
Consider Your Retirement Savings
Part of taking control of your finances means having a clear and accurate picture of where you stand. For those who do not own a home already, retirement savings are often the biggest assets. You may be able to take some funds out of a 401(k) or IRA for your home purchase, even if you are under the withdrawal age. There are certain requirements that must be met, such as using the funds within a specific time frame after withdrawing. Know that you will still need to pay taxes on the money. You may be able to borrow from your retirement accounts.
Understanding When to Walk Away
It is best to buy what you can afford so you don’t get stuck trying to afford something you can’t actually afford. Sometimes, it is best to purchase a home for right now. It may mean you get a home a little smaller than expected. Then you can purchase something bigger later on. It allows you to build equity instead of paying rent, and you can use the equity toward a home that will suit your needs better for the long-term. It is not hard to get attached to a home and imagine yourself living there, even if the price is too high or it will cost too much to repair. Understand when you should walk away instead of investing more time into the property. If the price is high and the seller will not negotiate, it might not be for you. Don’t be afraid to ask lots of questions before making a purchase. This helps you know what you are getting into so you can make the right decision.