Your Down Payment

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Lots of folks who are looking to purchase a new home qualify for various loan programs, but they don't have a lot of money to pay the standard down payment. Here are a few tips:

Slash the budget and build up savings. Look for ways you can reduce your expenses to put away money for a down payment. There are bank programs in which a portion of your take-home pay is automatically placed into a savings account every pay period. You might look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. For example, you may decide to move into less expensive housing, or stay close to home for your vacation.

Sell things you don't really need and get a part-time job. Look for a second job. This can be rough, but the temporary trial can help you get your down payment. Additionally, you can make an exhaustive list of items you can sell. Broken gold jewelry can bring a good amount from local jewelers. A closet full of small things might add up to a fair amount at a garage or tag sale. You can also explore what your investments could sell for.

Tap into retirement funds. Explore the details for your individual plan. Some homebuyers get down payment money from withdrawing what they need from their Individual Retirement Accounts or taking funds out of 401(k) programs. Be sure to find out about the tax consequences, repayment terms, and penalties for withdrawing early.

Ask for assistance from generous members of your family. Many homebuyers are sometimes fortunate enough to receive down payment assistance from caring parents and other family members who may be anxious to help get them in their own home. Your family members may be pleased to help you reach the goal of buying your first home.

Contact housing finance agencies. These agencies extend provisional mortgage programs to low and moderate-income homebuyers, buyers with an interest in renovating a home in a targeted part of the city, and other groups as specified by the finance agency. With the help of this kind of agency, you probably will be given a below market interest rate, down payment help and other incentives. These kinds of agencies may help you with a reduced interest rate, get you your down payment, and provide other assistance. These non-profit agencies exist to promote the value of homes in certain areas.

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

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in aiding low and moderate-income families qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who would not be eligible for a traditional mortgage on their own, by providing mortgage insurance to the private lenders. Down payment totals for FHA mortgages are less than those with traditional mortgages, even though these loans come with average rates of interest. The down payment may be as low as 3 percent while the closing costs could be included in the mortgage loan.

  • VA loans

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

  • Piggy-back loans

    You may fund your down payment through a second mortgage that closes along with the first. Generally the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. Rather than the traditional 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller commits to lend you part of his own equity to help you get your down payment funds. The buyer funds the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a somewhat higher rate with the loan financed by the seller.

No matter your strategy of pulling together your down payment funds, the satisfaction of living in your own home will be just as great!

Want to discuss down payment options? Give me a call at (619) 758-4035.