Putting Together Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they can't afford a large down payment. Here's where to get started

Slash the budget and build up savings. Scrutinize your budget to discover ways you can cut expenses to go toward your down payment. You may also decide to enroll in an automatic savings plan at your bank to have a percentage of your pay automatically deposited into savings. Some practical approaches to put together funds include moving into less expensive housing, and skipping a year's vacation.

Sell things you don't need and find a part-time job. Perhaps you can find a second job to get your down payment money. Additionally, you can make a comprehensive inventory of things you may be able to sell. Unworn gold jewelry can bring a good price from local jewelry stores. A closetful of small items might add up to a nice sum at a garage or tag sale. Also, you can think about selling any investments you own.

Borrow your down payment from a retirement plan. Explore the specifics of your particular plan. It is possible to take out funds from a 401(k) plan for a down payment or get a withdrawal from an IRA. Be sure to find out about the tax consequences, your obligation for repaying the money, and possible early withdrawal penalties.

Ask for assistance from generous family members. Many buyers are sometimes lucky enough to get down payment help from giving parents and other family members who may be willing to help get them in their first home. Your family members may be inclined to help you reach the goal of owning your own home.

Research housing finance agencies. Provisional mortgage loans are given to buyers in specific situations, such as low income homebuyers or people looking to improve homes in a targeted neighborhood, among others. With the help of a housing finance agency, you probably will be given an interest rate that is below market, down payment help and other incentives. Housing finance agencies may assist you with a lower interest rate, help with your down payment, and offer other advantages. These non-profit agencies to promote the value of homes in specific neighborhoods.

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

  • FHA mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low to moderate-income Americans get mortgage loans. An office of the U.S. 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. Down payment totals for FHA mortgages are less than those with typical mortgage loans, even though these loans have average rates of interest. The down payment can be as low as three percent and the closing costs can be financed in the mortgage loan.

  • VA mortgages

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which generally offers a reasonable interest rate, no down payment, and minimal closing costs. Even though the VA does not finance the mortgage loans, it does certify eligibility to qualify for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close with the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, rather than needing to put together the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to loan you some of his own equity to assist you with 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. Often, this form of second mortgage has a higher rate of interest.

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

Need to talk about down payments? Call us: 360-570-0106.

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