Building Your Down Payment

Lots of borrowers can qualify for various loan programs, but they don't have a large sum of cash to put up a down payment. Do you want to look into getting a new house, but aren't sure how to get together your down payment?

Tighten your belt and save. Scrutinize the budget to discover extra money to go toward your down payment. You also might enroll in an automatic savings plan to have a portion of your payroll automatically moved into a savings account. Some effective strategies to put together funds include moving into housing that is less expensive, and skipping your family vacation for a year or two.

Sell things you do not really need and find a part-time job. 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 creative about the items you migh be able to put up for sale. You might own desirable items you can sell at an auction website, or quality household items for a tag or garage sale. Also, you might want to think about selling any investments you hold.

Borrow from a retirement plan. Research the details for your particular plan. You can borrow funds from a 401(k) for you down payment or withdraw from an IRA. Be sure to ask your plan representative about the tax consequences, repayment terms, and any penalties for withdrawing early.

Ask for help from family members. Many buyers are sometimes lucky enough to receive help with their down payment help from thoughtful family members who are eager to help them get into their first home. Your family members may be willing to help you reach the milestone of owning your first home.

Research housing finance agencies. Provisional mortgage loans are provided to buyers in specific situations, such as low income purchasers or future homeowners planning to remodel homes in a particular part of town, among others. With the help of this type of agency, you may be given an interest rate that is below market, down payment help and other incentives. These types of agencies can assist you with a reduced rate of interest, get you your down payment, and provide other assistance. These non-profit programs were formed to promote home ownership in particular areas.

Research no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income individuals get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in qualifying for mortgage loans. FHA helps first-time buyers and others who may not be eligible for a traditional loan on their own, by offering mortgage insurance to private lenders. Down payment sums for FHA mortgages are smaller than those for typical mortgage loans, although these loans have current interest rates. Closing costs can be financed within the mortgage, and the down payment may be as low as 3% of the purchase price.

  • VA mortgages

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which typically offers a reasonable fixed interest rate, no down payment, and minimal closing costs. While it's true that the mortgage loans don't originate from the VA, the department verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes with the first. Most of the time, the piggyback loan is for 10 percent of the home's amount, and the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In the case of the seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically you'll pay a somewhat higher rate on the loan financed by the seller.

No matter your strategy of pulling together your down payment, the satisfaction of owning your own home will be just as sweet!

Want to discuss your down payment? Give us a call: 719-357-6601.

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