Building Your Down Payment

Lots of borrowers qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to buy a new house, but aren't sure how to put together a down payment?

Tighten your belt and save. Turn your budget inside out to discover extra money to save for your down payment. You might also try enrolling in an automatic savings plan at your bank to have a portion of your pay automatically deposited into your savings account. Some practical strategies to put together funds include moving into less expensive housing, and staying local for your family vacation for a year or two.

Work a second job and sell items you don't need. Look for a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get creative about the things you can sell. Maybe you own desirable items you can put up for sale on an online auction, or household items for a tag or garage sale. You could also research what your investments could bring if sold.

Borrow your down payment from a retirement plan. Research the specifics for your particular plan. Some homebuyers get down payment money by withdrawing from their Individual Retirement Accounts or borrowing from their 401(k) programs. Make sure you know about any penalties, the way this will affect on taxes, and repayment terms.

Request a generous gift from family. First-time buyers are often lucky enough to get help with their down payment help from giving family members who are able to help get them in their first home. Your family members may be pleased at the chance to help you reach the goal of owning your own home.

Contact housing finance agencies. These types of agencies provide provisional mortgate loan programs to moderate and low income buyers, buyers with an interest in remodeling a home within a particular area, and other certain kinds of buyers as defined by each agency. With the help of a housing finance agency, you can be given an interest rate that is below market, down payment help and other incentives. Housing finance agencies can help you with a reduced rate of interest, get you your down payment, and provide other benefits. These non-profit agencies to promote community in particular places.

Research no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low to moderate-income families get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who might not be eligible for a conventional mortgage by themselves, by offering mortgage insurance to the private lenders. Down payment requirements for FHA loans are lower than those of typical mortgage loans, even though these mortgages have average rates of interest. Closing costs may be included in the mortgage, and your down payment may be as low as 3% of the total amount.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This particular loan does not require a down payment, has mimimal closing costs, and provides the benefit of a competitive rate of interest. Although the VA does not actually issue the mortgage loans, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You may finance a down payment with a second mortgage that closes with the first. Generally the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. Instead of the usual 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to lend you a portion of his home equity to help you get your down payment money. In this scenario, you would borrow the majority of the purchase price from a traditional lending institution and borrow the remainder from the seller. Often, this type of second mortgage has higher interest.

The satisfaction will be the same, no matter how you manage to come up with the down payment. Your new home will be well worth it!

Need to talk about down payment options? Give us a call: (800) 299-0270.

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