Your Down Payment

Lots of buyers qualify for a mortgage loan, but they can't afford a large down payment. Here are a few tips:

Cut expenses and save. Be on the look-out for ways to reduce your monthly expenses to save toward a down payment. Also, you can look into bank programs in which a portion of your take-home pay is automatically deposited into a savings account each pay period. You could look into some big expenses in your budget that you can live without, or trim, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay close to home for your family vacation.

Work a second job and sell things you don't need. Try to get an additional job. This can be rough, but the temporary trial can help you get your down payment. You can also seriously consider the possessions you really need and the items you can put up for sale. Maybe you have desirable items you can sell at an auction website, or quality household items for a garage or tag sale. Also, you might want to look into selling any investments you hold.

Tap into your retirement funds. Explore the details for your particular plan. Some homebuyers get down payment money by withdrawing funds from their Individual Retirement Accounts or pulling funds out of 401(k) programs. Make sure you know about any penalties, the way this may affect on your taxes, and repayment terms.

Request a generous gift from your family. Many homebuyers are often fortunate enough to receive help with their down payment help from caring family members who may be prepared to help get them in their first home. Your family members may be willing to help you reach the goal of buying your first home.

Research housing finance agencies. Special mortgage programs are provided to buyers in certain circumstances, such as low income buyers or homebuyers looking to remodel homes in a targeted neighborhood, among others. Working with this kind of agency, you probably will get a below market interest rate, down payment help and other perks. Housing finance agencies may assist eligible buyers with a lower interest rate, help with your down payment, and provide other assistance. These non-profit agencies to promote community in particular areas.

Research no-down and low-down mortgage loan programs.

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low to moderate-income Americans get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, making the buyers eligible for a mortgage. Interest rates with an FHA mortgage are usually the market interest rate, but the down payment with an FHA mortgage will be lower than those of conventional loans. The required down payment can go as low as three percent while the closing costs may be covered by the mortgage.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This special loan requires no down payment, has mimimal closing costs, and offers a competitive rate of interest. Even though the VA doesn't finance the mortgages, it does certify eligibility to apply for a VA loan.

  • Piggy-back loans

    You can finance your down payment with a second mortgage that closes with the first. Usually the piggyback loan takes care of 10 percent of the home's price, while the first mortgage finances 80 percent. Rather than the usual 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to lend you a piece of his own equity to assist you with your down payment money. The buyer funds the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a slightly higher rate on the loan financed by the seller.

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

Need to talk about down payments? Give us a call at 562 320-0510.

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