what kind of limits are there on "gift" money? We are planning on applying for a mortgage loan in the next couple of weeks. Closing would be in May. The house is $117K. Our potential lender says that with our FHA loan, we need 3% down (~3500) and another 3% (~3500) for closing and fees. I have saved $4k, but the other $3k is in a mutual fund. If I cash out, what kind of penalty will I get?? Thanks
Those questions have the same answer... It varies. 1) How much money toward a mortgage can be gift money. It depends on the mortgage type. I know you said FHA, I'm not sure what the rules are for FHA. You could ask the loan officer or broker you are working with. 2) Mutual fund penalties - Do you hold the mutual fund in a retirement account? Or is it separate from the retirement account? Did you buy it through Schwab, Fidelity, etc.? some of those places say you have to keep the holding for a certain amount of time to avoid transaction fees. Also, is the mutual fund no-load, or is there a sales load? Sometimes to keep costs low, funds also have a early redemption fee (though usually this is for holding the fund less than 90 days or some other number of days).
it is a vanguard index fund. no-load. i purchase the shares directly through vanguard. i have bought x number of shares every month for about a year or so. It is solely for my down payment.
Do you know which index fund? Is it the 500? I pulled up the prospectus on the 500 index. no loads, no redemption fees. If this is the one, since you bought through Vanguard and it is a non-retirement account, there shouldn't be any fees for cashing out.
The same is also true for the total stock market index fund You could also call vanguard to verify, but you shouldn't have any problems. Just keep in mind that this is not a money market fund and has market risk. If the market goes up, you earn money, if it has gone down since you put your money it, you may have lost money. I wouldn't advise people to normally save down payment money in anything other than a money market fund. A friend of mine lost a lot of his down payment money by having it in the stock market. The stock market is for long term purposes, not short term.
u can sell it without any penalties, and since it's the new year, u wont have to worry about doing the paperwork for taxes on it till apr '03. tho it will be a pain, cuz with ur constant purchasing and probly dividend reinvesting, u will have to find a cost basis for every share. hopefully vanguard provides all the info (i think u can just fig out the avg price/shr and then figure out ur gain/loss based on what u sell it at).
