Putting Together Your Down Payment

Lots of folks who would like to buy a new house can easily qualify for a loan, but they don't have a lot of money to put up a down payment. Do you want to look into getting a new home, but aren't sure how you should put together your down payment?

Cut expenses and save. Be on the look-out for ways to trim your expenditures to save toward a down payment. You could also try enrolling in an automatic savings plan to automatically have a predetermined portion of your take-home pay moved into savings. You might look into some big expenses in your budget that you can live without, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or stay local for your family vacation.

Work a second job and sell things you don't need. Look for an additional job. This can be rough, but the temporary difficulty can provide your down payment money. Additionally, you can make a comprehensive list of things you can sell. Broken gold jewelry can be sold at local jewelry stores. You may have desirable items you can sell on an online auction, or household goods for a tag or garage sale. Also, you might want to consider selling any investments you hold.

Borrow from a retirement plan. Investigate the parameters of your retirement program. Many homebuyers get down payment money by withdrawing from their Individual Retirement Accounts or borrowing from 401(k) programs. Make sure you understand the tax consequences, your obligation for repayment, and early withdrawal penalties.

Ask for a generous gift from your family. First-time homebuyers are sometimes fortunate enough to get help with their down payment assistance from gracious family members who may be anxious to help get them in their own home. Your family members may be pleased at the chance to help you reach the milestone of owning your first home.

Research housing finance agencies. Provisional mortgage programs are provided to buyers in specific circumstances, such as low income buyers or people planning to improve homes in a targeted place, among others. Financing through a housing finance agency, you probably will be given an interest rate that is below market, down payment help and other advantages. Housing finance agencies may assist you with a lower interest rate, get you your down payment, and provide other advantages. The main goal of not-for-profit housing finance agencies is build up the purchase of homes in targeted parts of the city.

Learn about low-down and no-down mortgage loan programs.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low to 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 offers mortgage insurance to private lenders, enabling buyers who might not qualify for a typical loan, to receive a mortgage. Down payment totals for FHA loans are smaller than those of traditional mortgage loans, even though these mortgages hold average interest rates. Closing costs might be covered by the mortgage, and the down payment could be as low as 3% of the total amount.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This particular loan requires no down payment, has limited closing costs, and provides a competitive rate of interest. Even though the VA does not actually provide the mortgage loans, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You can finance a down payment through a second mortgage that closes along with the first. Usually the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage covers 80 percent. In contrast to the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her equity. In this scenario, you would borrow the majority of the purchase price from a traditional lender and finance the remaining amount with the seller. Often, this kind of second mortgage has a higher rate of interest.

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

Want to discuss down payments? Call us: (478) 746-2063.

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