Building Your Down Payment

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Lots of borrowers can easily qualify for various loan programs, but they can't afford a large down payment. Do you want to buy a new house, but don't know how you should get together your down payment?

Slash the budget and build up savings. Look for ways you can reduce your expenses to save toward a down payment. Also, you can look into bank programs in which some of your paycheck is automatically transferred into savings every pay period. Some practical strategies to put together funds include moving into less expensive housing, and skipping your family vacation for a year or two.

Work more and sell things you do not need. Look for a second job. This can be rough, but the temporary trial can provide your down payment money. Additionally, you can make an exhaustive inventory of items you may be able to sell. Unworn gold jewelry can be sold at local jewelers. Multiple small items might add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you hold.

Borrow from your retirement funds. Investigate the parameters of your retirement program. You may borrow money from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Be sure to learn about the tax consequences, your obligation for repayment, and any penalties for withdrawing early.

Ask for assistance from generous family members. First-time buyers sometimes get down payment help from gracious family members who may be anxious to help them get into their own home. Your family members may be inclined to help you reach the milestone of owning your own home.

Contact housing finance agencies. These types of agencies offer special mortgage loan programs- for low and moderate-income borrowers, buyers interested in rehabilitating a house within a particular area, and additional certain kinds of buyers as specified by the agency. With the help of this type of agency, you may be given an interest rate that is below market, down payment help and other incentives. Housing finance agencies may assist you with a lower rate of interest, help with your down payment, and provide other advantages. The principal purpose of not-for-profit housing finance agencies is boosting residence ownership in certain places.

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 an important role in helping low to moderate-income individuals get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who would not be eligible for a conventional loan by themselves, by providing mortgage insurance to private lenders. Interest rates with an FHA loan are usually the market interest rate, while the down payment with an FHA loan will be less than those of conventional loans. The required down payment can be as low as three percent and the closing costs can be financed in the mortgage loan.

  • VA mortgage loans

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan requires no down payment, has minimal closing costs, and offers a competitive rate of interest. Although the VA doesn't issue the mortgage loans, it does issue a certificate of eligibility to apply for a VA mortgage.

  • Piggy-back loans

    You can fund a down payment with a second mortgage that closes at the same time as the first. Usually the piggyback loan is for 10 percent of the purchase amount, and the first mortgage covers 80 percent. Rather than the usual 20 percent down payment, the homebuyer 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.. The buyer finances most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Usually you'll pay a slightly higher interest rate on the loan financed by the seller.

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

Want to discuss down payment options? Give us a call at 540-433-6611.

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