Your Down Payment

Lots of people who are looking to purchase a new home can easily qualify for various loan programs, but they can't afford a large down payment. Here are a few methods that will help you put together a down payment

Cut expenses and save. Look for ways to trim your monthly expenditures to set aside money for a down payment. Also, you can look into bank programs in which a portion of your paycheck is automatically placed into savings every pay period. You could look into some big expenses in your budget that you can do without, or reduce, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay local for your vacation.

Work a second job and sell things you don't need. Look for a second job. This can be exhausting, but the temporary trial can provide your down payment money. Additionally, you can make a comprehensive list of items you can sell. Broken gold jewelry can be sold at local jewelers. Multiple small items might add up to a fair amount at a garage or tag sale. You might also explore what your investments will bring if sold.

Borrow funds from your retirement plan. Investigate the parameters of your retirement plan. You can borrow funds from a 401(k) plan for you down payment or perform a withdrawal from an Individual Retirement Account. Make sure you are knowledgable about any penalties, the effect this could have on income taxes, and repayment obligation.

Ask for a generous gift from your family. First-time homebuyers are often lucky enough to get down payment help from thoughtful parents and other family members who are willing to help get them in their own home. Your family members may be inclined to help you reach the milestone of having your own home.

Research housing finance agencies. Special mortgage loans are given to homebuyers in certain circumstances, such as low income homebuyers or buyers planning to renovating houses in a particular area, among others. With the help of this kind of agency, you may receive an interest rate that is below market, down payment help and other incentives. These types of agencies may help you with a lower interest rate, help with your down payment, and offer other assistance. These non-profit programs to build up home ownership in specific areas.

Research no-down and low-down mortgage loans.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in helping low to moderate-income buyers get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for a home loan. Down payment sums for FHA mortgages are less than those for conventional mortgage loans, even though these mortgages have average rates of interest. Closing costs may be covered by the mortgage, while the down payment could be as low as 3% of the total amount.

  • VA loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which generally offers a competitive rate of interest, no down payment, and minimal closing costs. Even though the VA does not provide the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.

  • Piggy-back loans

    You may finance a down payment through a second mortgage that closes with the first. Generally the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, instead of putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to lend you a piece of his home equity to assist you with your down payment money. In this scenario, you would finance the majority of the purchase price with a traditional lending institution and finance the remainder with the seller. Usually you will pay a slightly higher interest rate on the loan from the seller.

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

Want to discuss the best options for down payments? Give us a call: 714-970-9700.

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