How Buyers Fund Their Home Purchase: Smart or Risky?
September 12, 2019
Buyers are doing everything from tapping into their retirement savings accounts to taking financial gifts from family and friends in order to bring more money to the closing table. Bankrate.com recently surveyed more than 2,500 adults about their home purchase to find the top ways they’re saving.
About 47% of first-time home buyers said they saved on their own to purchase a house. But others also sought help elsewhere, such as through a first-time home buyer grant or loan assistance program (21%), financial gifts from family or friends (21%), or by taking out money from their retirement savings (8.8%), the survey showed. Other less common efforts cited included getting an additional source of income (7.4%); receiving a loan from family or friends (6.3%); moving in with family or friends to cut down expenses (5.7%); and selling personal items like jewelry, cars, and electronics (4.9%).
Millennials are more likely than Generation Xers to say that they’ve used their retirement savings or sold personal belongings in order to find more money for buying a home, the survey showed.
“It’s troubling that people feel like they have to tap into their retirement savings,” Deborah Kearns, a mortgage analyst with Bankrate, told CNBC. “They’re already not saving enough for retirement, and they’re compounding the problem by taking out a loan or not contributing to save for a down payment.”
Updated: August 11, 2020