Your Down Payment

Many buyers qualify for various loan programs, but they can't afford a large down payment. Want to look into getting a new house, but don't know how to get together your down payment?

Slash your budget and build up savings. Be on the look-out for ways you can trim your expenditures to save toward a down payment. Also, you can look into bank programs in which some of your take-home pay is automatically deposited into a savings account each pay period. Some effective methods to put together funds include moving into less expensive housing, and staying local for your vacation for a year or two.

Sell things you don't really need and find a part-time job. Perhaps you can get a second job to get your down payment money. You can also seriously consider the possessions you actually need and the things you can put up for sale. A closetful of small things may add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you hold.

Borrow from your retirement funds. Investigate the parameters of your specific program. Some people get down payment money by withdrawing what they need from IRAs or getting money out of their 401(k) plans. You will need to make sure you understand about any penalties, the effect this will have on income taxes, and repayment terms.

Ask for a gift from family. First-time homebuyers are sometimes fortunate enough to get down payment assistance from thoughtful family members who may be anxious to help them get into their own home. Your family members may be eager to help you reach the milestone of owning your first home.

Contact housing finance agencies. These agencies extend special loan programs to low and moderate-income homebuyers, buyers with an interest in renovating a residence in a particular part of the city, and other specific kinds of buyers as specified by the agency. Working through a housing finance agency, you can receive a below market interest rate, down payment assistance and other advantages. These types of agencies may assist eligible homebuyers with a reduced rate of interest, help with your down payment, and offer other advantages. These non-profit programs exist to boost the value of homes in particular areas.

Research no-down and low-down mortgages.

  • FHA mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low to moderate-income individuals qualify for mortgages. Part of the United States 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. Down payment totals for FHA mortgages are below those with typical mortgage loans, although these mortgages hold current interest rates. Closing costs may be financed within the mortgage, and the down payment could be as low as 3% of the purchase price.

  • VA mortgage loans

    VA loans are backed by the Department of Veterans Affairs. Veterens and service people are eligible for a VA loan, which typically offers a competitive interest rate, no down payment, and limited closing costs. While it's true that the mortgages don't originate from the VA, the office verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You may finance a down payment with a second mortgage that closes with the first. Usually the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of come up with the usual 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her home equity. In this scenario, you would borrow the majority of the purchase price from a traditional lender and borrow the remaining amount from the seller. Usually you'll pay a somewhat higher interest rate on the loan financed by the seller.

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

Want to discuss down payment options? Give us a call: (334) 285-8850.

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