Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they don't have a lot of money to put up the standard down payment. Want to buy a new home, but don't know how you should get together a down payment?

Slash your budget and build up savings. Turn your budget upside-down to find extra money to go toward your down payment. There are bank programs through which some of your paycheck is automatically placed into a savings account each pay period. Some effective ways to build up funds include moving into less expensive housing, and staying local for your family vacation this year.

Work a second job and sell things you do not need. Perhaps you can get a second job and save your earnings. In addition, you can make an exhaustive list of items you can sell. Broken gold jewelry can bring a good price from local jewelers. A closetful of small things could add up to a nice sum at a garage or tag sale. You might also look into what any investments you have may bring if sold.

Borrow your down payment from a retirement plan. Explore the specifics for your particular plan. You may take out funds from a 401(k) plan for a down payment or perform a withdrawal from an Individual Retirement Account. Be sure you understand the tax consequences, repayment terms, and any early withdrawal penalties.

Ask for assistance from members of your family. First-time buyers are often lucky enough to get help with their down payment help from caring family members who are anxious to help them get into their first home. Your family members may be inclined to help you reach the milestone of having your own home.

Contact housing finance agencies. These types of agencies extend provisional mortgage programs to moderate and low income homebuyers, buyers interested in rehabilitating a residence within a targeted part of the city, and other specific kinds of buyers as specified by the finance agency. Working through a housing finance agency, you probably will receive a below market interest rate, down payment assistance and other incentives. These kinds of agencies can help you with a reduced interest rate, get you your down payment, and provide other advantages. These non-profit agencies were established to build up home ownership in specific places.

Learn about low-down and no-down mortgage loan programs.

  • 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 an important part in aiding low to moderate-income individuals qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who might not be able to qualify for a typical mortgage on their own, by offering mortgage insurance to lenders. Down payment requirements for FHA mortgages are smaller than those with conventional mortgages, although these mortgages have average rates of interest. The required down payment may go as low as 3 percent and the closing costs could be covered by the mortgage loan.

  • VA mortgage loans

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This specialized loan requires no down payment, has mimimal closing costs, and offers a competitive interest rate. Although the mortgage loans don't originate from the VA, the department verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You can finance a down payment using a second mortgage that closes with the first. Most of the time, the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. The borrower covers the remaining 10%, instead of needing to pull together the usual 20% down payment.

  • Carry-Back loans

    We a seller carries back a second mortgage, the seller loans you part of his or her equity. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Usually you'll pay a slightly higher interest rate with the loan from the seller.

The feeling of accomplishment will be the same, no matter which strategy you use to come up with your down payment. Your brand new home will be worth it!

Need to talk about down payments? Call us at 562 320-0510.

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