Putting Together Your Down Payment

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Many people who would like to buy a new home can qualify for various loan programs, but they don't have a lot of money to pay the standard down payment. Do you want to buy a new home, but don't know how you should put together your down payment?

Reduce expenses and save. Look for ways to reduce your expenses to put away money for a down payment. You could also try enrolling in an automatic savings plan at your bank to have a portion of your pay automatically transferred into your savings account. Some effective approaches to put together funds include moving into less expensive housing, and staying home for your vacation this year.

Sell items you do not really need and get a part-time job. Look for an additional job. This can be rough, but the temporary difficulty can provide your down payment money. You can also seriously consider the possessions you really need and the items you might be able to sell. Maybe you own collectibles you can put up for sale on an auction website, or household items for a garage or tag sale. Also, you can look into selling any investments you own.

Tap into your retirement funds. Investigate the provisions of your specific plan. It is possible to take out money from a 401(k) plan for a down payment or withdraw from an Individual Retirement Account. Be sure you understand the tax ramifications, your obligation for repaying funds, and any penalties for withdrawing early.

Ask for help from generous family members. First-time homebuyers are sometimes fortunate enough to get down payment assistance from giving family members who are willing to help them get into their own home. Your family members may be eager to help you reach the milestone of owning your own home.

Research housing finance agencies. These types of agencies offer special loan programs for low and moderate-income buyers, buyers with an interest in rehabilitating a house within a specific area, and additional certain types of buyers as specified by each finance agency. Working with a housing finance agency, you can get an interest rate that is below market, down payment help and other benefits. Housing finance agencies can assist you with a lower rate of interest, get you your down payment, and provide other benefits. The main goal of not-for-profit housing finance agencies is promoting residential ownership in particular places.

Find out about low-down and no-down mortgage loan programs.

  • FHA mortgages

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income Americans get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who wish to qualify for mortgages. FHA aids first-time homebuyers and others who may not be able to qualify for a conventional mortgage by themselves, by providing mortgage insurance to lenders. Interest rates with an FHA mortgage usually feature the current interest rate, but the down payment with an FHA loan are smaller than those of conventional loans. Closing costs can be included in the mortgage, and the down payment might be as low as 3 percent of the total amount.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan assists veterans and service people. This particular loan requires no down payment, has reduced closing costs, and provides a competitive interest rate. Even though the loans aren't actually financed by the VA, the office certifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You can finance your down payment through a second mortgage that closes along with the first. Most of the time, the piggyback loan is for 10 percent of the purchase amount, while the first mortgage finances 80 percent. Rather than the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to lend you some of his home equity to help you get your down payment money. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lender and finance the remaining amount with the seller. Typically, this form of second mortgage has higher interest.

No matter how you gather down payment money, the thrill of living in your own home will be just as sweet!

Want to discuss the best options for down payments? Give us a call at (402) 502-9037.