Putting Together Your Down Payment

Lots of buyers qualify for various loan programs, but they don't have a lot of money to pay the standard down payment. Below are a few straightforward ways to put together a down payment

Slash the budget and build up savings. Be on the look-out for ways you can reduce your expenditures to set aside money for a down payment. Also, you can look into bank programs through which some of your paycheck is automatically deposited into savings each pay period. Some effective methods to save additional funds include moving into a residence that is less expensive, and skipping a year's vacation.

Work a second job and sell things you do not need. Try to find a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. In addition, you can put together an exhaustive inventory of things you may be able to sell. Unworn gold jewelry can be sold at local jewelry stores. Maybe you own collectibles you can sell at an online auction, or household items for a tag or garage sale. You could also explore what any investments you own could bring if sold.

Borrow money from a retirement plan. Research the specifics of your individual plan. Many people get down payment money by withdrawing what they need from their Individual Retirement Accounts or borrowing from their 401(k) plans. You will want to ensure you understand about any penalties, the effect this could have on income taxes, and repayment obligation.

Ask for help from family members. Many buyers are sometimes lucky enough to get help with their down payment help from giving family members who are anxious to help them get into their first home. Your family members may be eager to help you reach the milestone of having your own home.

Research housing finance agencies. Provisional loan programs are provided to buyers in certain situations, such as low income buyers or future homeowners looking to remodel homes in a certain part of town, among others. With the help of a housing finance agency, you may be given a below market interest rate, down payment assistance and other perks. These types of agencies may assist eligible homebuyers with a lower rate of interest, get you your down payment, and provide other assistance. These non-profit programs to promote the value of homes in specific places.

Learn about low-down and no-down mortgages.

  • Federal Housing Administration (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 part in assisting low to moderate-income families get mortgage loans. 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 financing. Interest rates with an FHA mortgage are generally the market interest rate, while the down payment requirements with an FHA mortgage will be below those of conventional loans. Closing costs can be included in the mortgage, and the down payment can be as low as 3% of the total.

  • VA mortgage loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans qualify for a VA loan, which usually offers a competitive fixed rate of interest, no down payment, and minimal closing costs. While the mortgage loans are not actually financed by the VA, the office certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Usually the piggyback loan is for 10 percent of the purchase amount, while the first mortgage covers 80 percent. The borrower covers the remaining 10%, rather than putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to lend you a portion of his own equity to help you get your down payment funds. The buyer finances most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a somewhat higher interest rate on the loan financed by the seller.

No matter how you gather down payment money, the thrill of owning your own home will be just as great!

Need to talk about down payment options? Give us a call: (334) 285-8850.

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