Your Down Payment

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Lots of borrowers can easily qualify for various loan programs, but they don't have a lot of money to pay a down payment. Want to look into getting a new house, but don't know how to get together a down payment?

Tighten your belt and save. Turn your budget upside-down to uncover ways you can cut expenses to save for your down payment. Also, you can look into bank programs through which a portion of your paycheck is automatically placed into a savings account each pay period. Some practical strategies to save additional funds include moving into less expensive housing, and skipping a year's vacation.

Work a second job and sell things you don't need. Try to get a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get serious about the possessions you really need and the things you may be able to sell. A closet full of small items could add up to a fair amount at a garage or tag sale. You could also look into what any investments you have will bring if sold.

Borrow from retirement funds. Check the provisions of your particular plan. You can borrow funds from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Make sure you know about any penalties, the way this could affect on income taxes, and repayment obligation.

Ask for a generous gift from family. First-time homebuyers sometimes get down payment help from giving parents and other family members who may be willing to help get them in their own home. Your family members may be inclined to help you reach the goal of buying your own home.

Research housing finance agencies. Special mortgage programs are offered to homebuyers in certain situations, such as low income buyers or people looking to remodel houses in a targeted area, among others. With the help of a housing finance agency, you probably will get an interest rate that is below market, down payment help and other incentives. Housing finance agencies may assist eligible homebuyers with a lower rate of interest, get you your down payment, and provide other benefits. These non-profit programs exist to promote community in particular neighborhoods.

Explore no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in assisting low and moderate-income families get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, ensuring the buyers are eligible for a mortgage. Interest rates with an FHA mortgage are usually the market interest rate, while the down payment with an FHA mortgage are lower than those of conventional loans. Closing costs may be covered by the mortgage, while the down payment can be as low as 3% of the purchase price.

  • VA mortgages

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which usually offers a reasonable interest rate, no down payment, and reduced closing costs. Even though the mortgages don't originate from the VA, the office verifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes with the first. Usually the piggyback loan is for 10 percent of the home's amount, while the first mortgage covers 80 percent. The borrower pays the remaining 10%, instead of come up with the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you some of his own equity to help you get your down payment funds. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Often, this form of second mortgage will have a higher rate of interest.

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

Want to discuss your down payment? Give us a call at (608) 372-9222.