Your Down Payment

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Many borrowers qualify for several different kinds of mortgages, but they can't afford a large down payment. Below are a few ways to put together a down payment

Cut expenses and save. Be on the look-out for ways to reduce your expenses to put away money for a down payment. There are bank programs through which a specific portion of your paycheck is automatically deposited into savings each pay period. Some practical approaches to build up funds include moving into less expensive housing, and staying local for your vacation for a year or two.

Work a second job and sell items you don't need. Maybe you can find an additional job to get your down payment money. You can also get creative about the things you can put up for sale. You may have collectibles you can sell at an auction website, or quality household items for a garage or tag sale. You can also explore what any investments you own may bring if sold.

Borrow from retirement funds. Check the provisions of your particular plan. Many homebuyers get down payment money by withdrawing from IRAs or getting money out of their 401(k) plans. You will need to ensure you understand about any penalties, the effect this will have on income taxes, and repayment terms.

Ask for help from generous members of your family. First-time homebuyers sometimes get down payment help from caring parents and other family members who may be anxious to help get them in their first home. Your family members may be willing to help you reach the milestone of buying your first home.

Contact housing finance agencies. Special mortgage loan programs are extended to homebuyers in specific situations, such as low income purchasers or future homeowners looking to remodel houses in a specific neighborhood, among others. Financing through a housing finance agency, you probably will be given a below market interest rate, down payment assistance and other benefits. Housing finance agencies may assist eligible buyers with a lower rate of interest, get you your down payment, and provide other assistance. These non-profit programs were established to promote community in specific areas.

Research no-down and low-down mortgages.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in helping low to moderate-income buyers qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time buyers and others who might not be able to qualify for a conventional loan by themselves, by providing mortgage insurance to the lenders. Interest rates for an FHA mortgage are typically the going interest rate, but the down payment amounts with an FHA loan will be less than those of conventional loans. Closing costs might be financed in the mortgage, and your down payment might be as low as 3% of the total amount.

  • VA mortgage loans

    VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people qualify for a VA loan, which typically offers a reasonable rate of interest, no down payment, and limited closing costs. Although the VA does not actually finance the loans, it does certify eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    You may fund a down payment using a second mortgage that closes with the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The borrower covers the remaining 10%, instead of putting the typical 20% down payment.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. The buyer finances most of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Usually you will pay a somewhat higher rate with the loan from the seller.

The feeling of accomplishment will be the same, no matter how you manage to put together your down payment. Your brand new home will be worth it!

Want to discuss the best options for down payments? Give us a call at 661-489-LEND (5363).

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