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Many people dream of owning a home but feel overwhelmed by the idea of saving tens of thousands of dollars for a down payment. In some cases, borrowing money for a down payment can be a smart move, but there are some important caveats to consider.

When Does It Make Sense to Borrow for a Down Payment?
Many lenders require buyers who put down less than 20 percent of a homes purchase price to obtain private mortgage insurance (PMI) to protect the lender if the buyer defaults. PMI can cost hundreds of dollars per month, on top of mortgage payments, and needs to be paid until the homeowner has 20 percent equity. If you put down 20 percent, youll be able to avoid PMI. If loan payments would cost less than PMI, borrowing to make a large down payment might make sense.

Potential Sources of Funds
If you own another property, you might be able to use a home equity loan or a home equity line of credit to finance a down payment. The interest rate would probably be relatively low, but using your current home as collateral to buy a new one would mean you could lose both houses if you were unable to afford all your payments.

Another option is to take a loan from your 401(k). You could get a low interest rate, but you could also lose a substantial amount of potential savings since any money you withdrew would not be able to accumulate compounded interest.

A personal loan could be quick and easy to obtain and could have a much lower interest rate than credit cards, but it would raise your debt-to-income ratio. That could make a lender reluctant to give you a mortgage.

A variety of federal, state and local programs can help homebuyers secure loans with favorable terms, as well as down payment assistance. Since many of those programs require low down payments, you could buy a house, but you would have to pay for PMI since your down payment would be less than 20 percent. Depending on your circumstances, you might or might not be better off borrowing money from another source to put down 20 percent.

Borrowing money from family or friends could help you avoid high interest rates and have a flexible repayment schedule. Before you take a loan from family or friends, make sure you can repay it. Failing to meet your obligations could cause irreparable harm to your personal relationship.

Weigh Your Options
PMI can significantly increase monthly housing costs for years. If you can put down 20 percent and avoid PMI, you may save thousands of dollars in the long run. You might be able to borrow money from several sources, but think carefully about the pros and cons. Discuss your options with a financial planner and your real estate agent.

This article is intended for informational purposes only and should not be construed as professional or legal advice.

Published with permission from RISMedia.

Eco-friendly features are all the rage today as homeowners commit to living greener lives. But for those looking to reduce their carbon footprint, where do you begin?

For many, the answer is the kitchen. The central hub of the home, the kitchen offers a perfect foundation for incorporating green features and appliances.

Getting started, you may want to consider adding an induction stove, a stove that utilizes magnetic energy to induce a current that heats the food. Not only do pans heat up quickly on this type of stove, but the amount of time needed to cook meals is greatly reduced. In addition to the energy savings and coolness factor, induction stoves tend to be much safer than traditional stoves since theres no open flame or hot electric element involved.

Its also important to add energy-efficient appliances. If youre trying to sell your home and an old dishwasher and refrigerator unit serve as the focal point of the room, it could be a major deterrent to a sale.

Changing up the lighting is another easy way to up the eco-friendly factor and make the kitchen appear fresh and new. Installing ceiling fans is another simple, inexpensive way toward making the space more eco-friendly. Ceiling fans will circulate warm air in the winter and will help keep the kitchen cool in the summer, keeping heating and cooling costs lower throughout the year.

When it comes to greening your home, remember that you dont need to drain your bank account to find success. For example, adding a water filter to your sink (and saying goodbye to bottled water) is an inexpensive way to promote green living. Take this one step further by highlighting the fact that the water filter removes harmful contaminants, providing a fresh drink that can easily be enjoyed when relaxing at home or while out and about.

While not every change will yield a payoff, data shows that kitchen improvements will reap the highest rewards in home value, offering the fastest way to get someone interested in buying your home.

Published with permission from RISMedia.

Here are four things to keep in mind when looking at waterfront property.

Do Your Research

Elevation is important to take into account to ensure the house isnt prone to flooding. Property lines can also be an issue, as some shorelines are considered public land.

Consider How Youll Use It

Waterfront property can vary dramatically and so too can the lifestyle that it delivers.

Extra Costs

Living on the water is expensive. From flood insurance to pricey hurricane-proof windows, there are plenty of extra costs that come with the territory.

Work With a Waterfront Specialist

The best resource you can have is a real estate agent who specializes in local waterfront property.

Published with permission from RISMedia.

If you’re between jobs or retired”or not working and considering retirement”you can still buy a home and get a mortgage that will require you to make monthly payments.

While you don’t need a job to get a mortgage, what you do need is income. And there are many types of income that lenders will accept for a mortgage loan. You’ll likely need to have a few of them to qualify, and you’ll need to document them. Here are some sources of income beyond having a job:

Social Security
Retirees aren’t the only people receiving Supplemental Security Income (SSI), which is a form of income. You may be on permanent disability or dependent on someone and receive SSI income.

Pension
If a former employer is sending you a regular check each month, it should be easy to document this income with bank statements or an award letter.

Retirement Fund Withdrawals
IRA withdrawals are required at a certain age. At age 59 1/2, you can withdraw any amount from your IRA without having to pay the 10 percent penalty; however, your regular income tax will be due on each withdrawal. Traditional IRA distributions aren’t required until after age 70 1/2. Most mortgage lenders will require having enough money in your retirement accounts to support withdrawals for at least five years.

Spousal or Child Support
You aren’t required by law to reveal income from spousal or child support, but you can if you want to, especially if it’s needed to qualify for a mortgage. The income should continue for at least three years, which should be stated in a divorce decree or child support agreement.

Dividend and Interest Income
If your investments are earning you money, that income can help you qualify for a mortgage. Most lenders will average the last two years of income as reported to the IRS, so lenders will need tax returns to use this income.

Asset-Based Income
Aside from any restricted retirement accounts, investments and savings that don’t have dividend or interest income can be used as income to qualify for a mortgage. These funds should be substantial, since Fannie Mae and Freddie Mac rules divide those assets by the number of months in which the loan will be repaid.

Private Loans
If you’ve loaned someone money and they’re paying you back, or you sold a house or business and are carrying a loan note that’s being repaid to you, these can qualify as income. Payments must last for at least three years to qualify as income toward a mortgage. A copy of the note and bank statements showing payments received will be required.

This article is intended for informational purposes only and should not be construed as professional or legal advice.

Published with permission from RISMedia.

Published with permission from RISMedia.