Building Your Down Payment

Many buyers can qualify for several different kinds of mortgages, but they don't have a lot of money to pay a down payment. Want to look into getting a new house, but don't know how you should get together a down payment?

Slash your budget and build up savings. Look for ways to trim your expenses to set aside funds for a down payment. Also, you can look into bank programs in which a specific portion of your take-home pay is automatically placed into a savings account each pay period. Some practical strategies to build up funds include moving into a residence that is less expensive, and skipping your vacation for a year or two.

Sell things you do not need and find a second job. Maybe you can get an additional job to get your down payment money. Additionally, you can make an exhaustive inventory of items you can sell. Broken gold jewelry can bring a good amount from local jewelers. A closetful of small items could add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Tap into your retirement funds. Explore the details for your particular plan. Some homebuyers get down payment money from withdrawing from their IRAs or taking funds out of their 401(k) programs. Make sure to learn about the tax consequences, your obligation for repaying the money, and early withdrawal penalties.

Ask for a gift from your family. First-time homebuyers somtimes get help with their down payment assistance from thoughtful parents and other family members who may be prepared to help get them in their own home. Your family members may be happy at the chance to help you reach the goal of owning your first home.

Research housing finance agencies. These types of agencies provide special mortgage programs for low and moderate-income buyers, buyers interested in sprucing up a house within a targeted part of the city, and additional specific kinds of buyers as specified by the finance agency. With the help of a housing finance agency, you can get an interest rate that is below market, down payment assistance and other benefits. These kinds of agencies can help you with a lower interest rate, get you your down payment, and offer other benefits. These non-profit agencies to promote home ownership in particular areas.

Explore no-down and low-down mortgage loans.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low to moderate-income Americans get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgages. FHA assists first-time homebuyers and others who might not be eligible for a conventional loan on their own, by providing mortgage insurance to the lenders. Interest rates for an FHA loan are normally the going interest rate, but the down payment amounts for an FHA mortgage will be lower than those of conventional loans. Closing costs might be included in the mortgage, while your down payment may be as low as 3% of the total.

  • VA mortgage loans

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan does not require a down payment, has limited closing costs, and provides the benefit of a competitive interest rate. Although the loans don't originate from the VA, the office verfifies applicants by providing eligibility certificates.

  • Piggy-back loans

    You can finance a down payment through a second mortgage that closes at the same time as the first. Generally the piggyback loan is for 10 percent of the purchase price, and the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, instead of come up with the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to lend you part of his own equity to help you get your down payment funds. You would finance the largest portion of the purchase price with a traditional mortgage lending institution and borrow the remainder from the seller. Often, this form of second mortgage will have a higher rate of interest.

No matter how you gather your down payment, the satisfaction of reaching the goal of living in your own home will be just as sweet!

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

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