Your Down Payment

Lots of buyers can qualify for various loan programs, but they don't have much to pay the standard down payment. Do you want to buy a new house, but aren't sure how to put together a down payment?

Tighten your belt and save. Look for ways to trim your expenditures to save toward a down payment. You might also try enrolling in an automatic savings plan at your bank to have a portion of your pay automatically moved into your savings account. Some effective ways to build up funds include moving into housing that is less expensive, and skipping a year's vacation.

Sell things you do not really need and find a part-time job. Look for an additional job. This can be exhausting, but the temporary trial can help you get your down payment. You can also get creative about the things you can put up for sale. Multiple small items can add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you own.

Borrow money from your retirement plan. Explore the specifics for your particular plan. You can borrow funds from a 401(k) for you down payment or get a withdrawal from an IRA. Be sure you comprehend the tax ramifications, repayment terms, and any penalties for withdrawing early.

Ask for a gift from your family. Many buyers are often fortunate enough to get down payment assistance from thoughtful parents and other family members who may be able to help get them in their first home. Your family members may be pleased to help you reach the milestone of having your first home.

Learn about housing finance agencies. Special mortgate loan programs are offered to homebuyers in certain circumstances, such as low income buyers or people looking to renovating houses in a targeted neighborhood, among others. With the help of this type of agency, you probably will receive an interest rate that is below market, down payment assistance and other perks. These types of agencies can help you with a lower rate of interest, help with your down payment, and provide other advantages. These non-profit programs exist to promote community in certain neighborhoods.

Research no-down and low-down mortgage loans.

  • FHA loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a vital part in assisting low and moderate-income individuals qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, making the buyers eligible for a mortgage loan. Interest rates with an FHA loan are typically the market interest rate, while the down payment with an FHA loan will be below those of conventional loans. Closing costs can be covered by the mortgage, while your down payment can be as low as 3 percent of the total amount.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan requires no down payment, has reduced closing costs, and offers a competitive rate of interest. While the mortgages don't originate from the VA, the department certifies applicants by providing eligibility certificates.

  • Piggy-back loans

    You can fund a down payment using a second mortgage that closes along with the first. In most cases the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than having to pull together the usual 20% down payment.

  • Carry-Back loans

    In the case of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. The buyer funds the majority of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Typically you'll pay a somewhat higher interest rate on the loan from the seller.

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

Need to talk about down payment options? Give us a call: 310-379-5997.

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