Putting Together Your Down Payment

Lots of people who are looking to purchase a new home can qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to look into getting a new house, but don't know how you should put together a down payment?

Cut expenses and save. Scrutinize your budget to find ways you can cut expenses to save for your down payment. Also, you can look into bank programs through which a specific portion of your paycheck is automatically transferred into savings every pay period. You would be wise to look into some big expenses in your budget that you can live without, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a vacation.

Sell things you don't need and get a part-time job. Look for an additional job. This can be exhausting, but the temporary trial can help you get your down payment. Additionally, you can make an exhaustive list of things you can sell. Broken gold jewelry can be sold at local jewelry stores. A closetful of small items can add up to a nice sum at a garage or tag sale. Also, you might want to think about selling any investments you hold.

Tap into your retirement funds. Explore the specifics of your individual plan. You can borrow money from a 401(k) for you down payment or make a withdrawal from an Individual Retirement Account. Make sure to learn about the tax consequences, repayment terms, and penalties for withdrawing early.

Ask for help from members of your family. First-time homebuyers are often fortunate enough to get down payment help from gracious parents and other family members who may be anxious to help get them in their first home. Your family members may be eager to help you reach the milestone of having your first home.

Learn about housing finance agencies. These agencies provide provisional mortgate loan programs- for moderate and low income homebuyers, buyers interested in rehabilitating a house in a specific area, and other groups as specified by the finance agency. With the help of a housing finance agency, you can be given an interest rate that is below market, down payment assistance and other perks. Housing finance agencies may help you with a reduced rate of interest, get you your down payment, and offer other benefits. These non-profit agencies to promote home ownership in certain places.

Learn about low-down and no-down mortgages.

  • Federal Housing Administration (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 vital role in aiding low to moderate-income individuals qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to qualify for home financing. FHA assists first-time buyers and others who may not be eligible for a traditional loan by themselves, by providing mortgage insurance to private lenders. Interest rates with an FHA mortgage normally feature the current interest rate, while the down payment for an FHA loan are below those of conventional loans. Closing costs can be covered by the mortgage, and your down payment can be as low as 3 percent of the purchase price.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan does not require a down payment, has mimimal closing costs, and offers a competitive interest rate. While the mortgages aren't actually provided by the VA, the office verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You may finance your down payment through a second mortgage that closes with the first. Usually the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage covers 80 percent. Instead of the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In the case of a seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. You would borrow the majority of the purchase price from a traditional lender and borrow the remaining amount from the seller. Typically, this kind of second mortgage has higher interest.

No matter your method of getting together your down payment, the thrill of owning your own home will be just as great!

Need to talk about down payment options? Give us a call: 714-970-9700.

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