Building Your Down Payment

Lots of people who would like to buy a new home qualify for various loan programs, but they can't afford a large down payment. Here are a few ways to get together your down payment

Reduce expenses and save. Look for ways you can trim your monthly expenditures to put away money for a down payment. You could also decide to enroll in an automatic savings plan to have a portion of your pay automatically transferred into savings. Some effective methods to build up funds include moving into a residence that is less expensive, and skipping a year's vacation.

Work more and sell things you don't need. Perhaps you can get an additional job and build up your earnings. You can also seriously consider the possessions you actually need and the items you could be able to sell. You may own collectibles you can put up for sale at an online auction, or quality household goods for a garage or tag sale. You could also look into what your investments will bring if sold.

Borrow from a retirement plan. Investigate the provisions of your particular plan. You may pull out money from a 401(k) for you down payment or withdraw from an Individual Retirement Account. Make sure to learn about the tax consequences, repayment terms, and possible penalties for withdrawing early.

Ask for help from generous family members. Many homebuyers are sometimes fortunate enough to get help with their down payment assistance from giving family members who are prepared to help get them in their first home. Your family members may be willing to help you reach the goal of buying your first home.

Research housing finance agencies. These agencies provide special loan programs to moderate and low income buyers, buyers interested in rehabilitating a residence in a particular part of the city, and other groups as specified by each finance agency. Financing with a housing finance agency, you can be given a below market interest rate, down payment help and other advantages. These kinds of agencies can assist you with a reduced interest rate, help with your down payment, and provide other advantages. The principal goal of non-profit housing finance agencies is to promote residential ownership in specific places.

Explore no-down and low-down mortgages.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low and moderate-income families qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgage loans. FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for financing. Down payment totals for FHA mortgages are below those with typical mortgages, even though these loans hold average rates of interest. Closing costs may be included in the mortgage, and the down payment could be as low as 3 percent of the total amount.

  • VA mortgage loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which generally offers a competitive interest rate, no down payment, and minimal closing costs. Even though the mortgage loans don't originate from the VA, the department certifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close along with the first. In most cases the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of needing to pull together the typical 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. In this scenario, you would borrow the largest portion of the purchase price from a traditional mortgage lending institution and borrow the remainder from the seller. Usually this kind of second mortgage will have a higher rate of interest.

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

Need to talk about the best options for down payments? Call us at (334) 285-8850.

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