Building Your Down Payment

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Lots of borrowers qualify for a loan, but they don't have much to put up a down payment. Below are a few ways to put together a down payment

Tighten your belt and save. Scrutinize the budget to find extra money to go toward your down payment. Also, you can look into bank programs through which some of your paycheck is automatically transferred into savings each pay period. You would be wise to look into some big expenses in your spending history that you can do without, or trim, at least temporarily. For example, you may move into less expensive housing, or stay close to home for your family vacation.

Work a second job and sell things you do not need. Maybe you can get an additional job and save your earnings. You can also seriously consider the possessions you really need and the items you can sell. Multiple small items may add up to a nice sum at a garage or tag sale. You might also research what your investments may bring if sold.

Borrow your down payment from a retirement plan. Investigate the parameters of your particular plan. It is possible to borrow funds from a 401(k) plan for a down payment or make a withdrawal from an Individual Retirement Account. You will want to make sure you are clear about any penalties, the way this will affect on income taxes, and repayment terms.

Ask for help from family members. First-time homebuyers sometimes get help with their down payment help from giving family members who are eager to help get them in their own home. Your family members may be pleased to help you reach the milestone of owning your own home.

Research housing finance agencies. These types of agencies offer special mortgage loan programs- for moderate and low income homebuyers, buyers interested in remodeling a house in a targeted area, and other groups as defined by each agency. With the help of this kind of agency, you may be given an interest rate that is below market, down payment help and other benefits. Housing finance agencies may assist you with a lower rate of interest, help with your down payment, and offer other benefits. The principal goal of non-profit housing finance agencies is build up residence ownership in targeted places.

Explore no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low to moderate-income families qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time buyers and others who would not be able to qualify for a typical mortgage by themselves, by providing mortgage insurance to lenders. Interest rates with an FHA loan typically feature the market interest rate, while the down payment requirements for an FHA mortgage will be smaller than those of conventional loans. The required down payment may be as low as three percent and the closing costs can be covered by the mortgage.

  • VA loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can get a VA loan, which typically offers a reasonable fixed rate of interest, no down payment, and minimal closing costs. While the mortgages don't originate from the VA, the department verifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Most of the time, the piggyback loan is for 10 percent of the purchase price, and the first mortgage covers 80 percent. Rather than the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to loan you a piece of his own equity to assist you with your down payment funds. You would borrow the largest portion of the purchase price from a traditional mortgage lender and finance the remaining amount with the seller. Usually you'll pay a somewhat higher interest rate with the loan from the seller.

No matter your strategy of putting together down payment money, the thrill of reaching the goal of owning your own home will be just as great!

Want to discuss down payments? Give us a call at 602-953-1700.

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