Your Down Payment

Many folks who would like to purchase a new home qualify for various loan programs, but they can't afford a large down payment. Here are a few straightforward methods that will help you put together your down payment

Slash your budget and build up savings. Scrutinize your budget to discover extra money to save for your down payment. Also, you can look into bank programs in which some of your paycheck is automatically deposited into a savings account each pay period. Some practical approaches to save additional funds include moving into less expensive housing, and skipping your vacation for a year or two.

Work a second job and sell items you don't need. Perhaps you can get an additional job and save your earnings. You can also get creative about the items you may be able to sell. Multiple small things can add up to a nice sum at a garage or tag sale. You can also research what any investments you own could bring if sold.

Borrow from retirement funds. Check the provisions of your specific program. You may borrow money from a 401(k) for you down payment or withdraw from an Individual Retirement Account. Be sure to ask your plan representative about the tax ramifications, your obligation for repayment, and possible penalties for withdrawing early.

Ask for a gift from your family. Many homebuyers somtimes get down payment assistance from giving 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 goal of having your first home.

Learn about housing finance agencies. Provisional mortgate loan programs are provided to homebuyers in certain situations, like low income buyers or future homeowners planning to remodel houses in a specific place, among others. With the help of a housing finance agency, you probably will receive an interest rate that is below market, down payment help and other incentives. Housing finance agencies can help eligible homebuyers with a lower interest rate, help with your down payment, and provide other benefits. These non-profit agencies exist to boost community in particular places.

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

  • FHA mortgages

    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 and moderate-income individuals qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a loan. Interest rates with an FHA mortgage are normally the going interest rate, while the down payment amounts with an FHA mortgage are lower than those of conventional loans. The down payment can go as low as three percent and the closing costs can be packaged in the mortgage.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan does not require a down payment, has limited closing costs, and offers a competitive interest rate. While it's true that the loans don't originate from the VA, the department verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You can fund your down payment with a second mortgage that closes with the first. Usually the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage covers 80 percent. The borrower covers the remaining 10%, rather than having to pull together the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to lend you some of his own equity to help you get your down payment funds. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lending institution and borrow the remaining amount from the seller. Typically you'll pay a slightly higher interest rate on the loan financed by the seller.

The feeling of accomplishment will be the same, no matter which method you use to put together the down payment. Your new home will be worth it!

Want to discuss your down payment? Give us a call at (302) 765-8089.

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