Your Down Payment

Many folks who are looking to purchase a new home can easily qualify for various loan programs, but they can't afford a large down payment. Want to buy a new house, but aren't sure how you should put together a down payment?

Cut expenses and save. Turn your budget upside-down to discover extra money to save for your down payment. You also might enroll in an automatic savings plan at your bank to have a portion of your payroll automatically moved into a savings account. You could look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or skip a vacation.

Work more and sell things you don't need. Perhaps you can find an additional job and build up your earnings. In addition, you can put together a comprehensive list of things you can sell. Unused gold jewelry can be sold at local jewelers. Multiple small items may add up to a nice sum at a garage or tag sale. You can also look into what any investments you own will sell for.

Borrow money from your retirement plan. Explore the specifics for your individual plan. Some people get down payment money from withdrawing what they need from their Individual Retirement Accounts or pulling funds out of 401(k) plans. Be sure to learn about the tax ramifications, your obligation for repaying the money, and possible penalties for withdrawing early.

Ask for help from members of your family. Many homebuyers somtimes get down payment help from thoughtful family members who may be able to help get them in their first home. Your family members may be willing to help you reach the milestone of owning your first home.

Learn about housing finance agencies. Special mortgage programs are offered to buyers in certain circumstances, like low income buyers or buyers planning to improve houses in a specific neighborhood, among others. Working with this kind of agency, you probably will be given an interest rate that is below market, down payment help and other benefits. These types of agencies may assist eligible buyers with a reduced interest rate, get you your down payment, and offer other advantages. These non-profit programs were formed to build up the value of homes in specific neighborhoods.

Learn about low-down and no-down mortgages.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in helping low to moderate-income buyers get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who may not be able to qualify for a conventional mortgage on their own, by offering mortgage insurance to the private lenders. Down payment amounts for FHA mortgages are lower than those of typical mortgage loans, even though these mortgages hold current interest rates. Closing costs may be covered by the mortgage, and your down payment can be as low as 3 percent of the total amount.

  • VA mortgage loans

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This particular loan requires no down payment, has limited closing costs, and offers a competitive rate of interest. While the mortgages aren't actually financed by the VA, the department certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    You may fund a down payment with a second mortgage that closes at the same time as the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. The borrower pays the remaining 10%, instead of needing to pull together the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you some of his home equity to assist you with your down payment money. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Usually you will pay a somewhat higher rate on the loan from the seller.

No matter how you gather your down payment, the satisfaction of reaching the goal of living in your own home will be just as great!

Want to discuss down payments? Call us: 7193576601.

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