Building Your Down Payment

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Lots of buyers can qualify for various loan programs, but they don't have a lot of cash to pay a down payment. Want to look into getting a new house, but don't know how to put together your down payment?

Cut expenses and save. Be on the look-out for ways to trim your monthly expenditures to set aside money for a down payment. Also, you can look into bank programs in which some of your paycheck is automatically placed into savings every pay period. Some practical approaches to put together funds include moving into a residence that is less expensive, and staying local for your family vacation for a year or two.

Work a second job and sell things you do not need. Maybe you can get an additional job to get your down payment money. Additionally, you can put together a comprehensive inventory of items you may be able to sell. Unused gold jewelry can be sold at local jewelers. You may own desirable items you can put up for sale at an auction website, or quality household goods for a garage or tag sale. Also, you can consider selling any investments you own.

Tap into retirement funds. Research the specifics for your individual plan. Many people get down payment money from withdrawing what they need from their Individual Retirement Accounts or borrowing from their 401(k) programs. Make sure you are clear about any penalties, the effect this will have on taxes, and repayment obligation.

Request a generous gift from family. Many homebuyers sometimes receive help with their down payment assistance from thoughtful parents and other family members who are prepared to help get them in their own home. Your family members may be pleased to help you reach the milestone of buying your first home.

Contact housing finance agencies. These types of agencies provide provisional mortgage programs to low and moderate-income homebuyers, buyers interested in renovating a residence within a particular part of the city, and additional specific types of buyers as specified by each agency. With the help of a housing finance agency, you can be given an interest rate that is below market, down payment help and other advantages. Housing finance agencies can assist eligible buyers with a lower rate of interest, get you your down payment, and provide other advantages. The primary purpose of not-for-profit housing finance agencies is promoting the purchase of homes in certain places.

Learn about low-down and no-down mortgage loans.

  • FHA loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income Americans get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who would not be eligible for a typical mortgage loan on their own, by offering mortgage insurance to the lenders. Interest rates with an FHA loan are typically the market interest rate, but the down payment requirements for an FHA mortgage are below those of conventional loans. Closing costs might be financed in the mortgage, while the down payment may be as low as 3 percent of the purchase price.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This particular loan does not require a down payment, has reduced closing costs, and provides a competitive rate of interest. Even though the VA doesn't actually issue the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Generally the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than needing to pull together the usual 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her equity. In this scenario, you would finance the largest portion of the purchase price with a traditional lending institution and borrow the remaining amount from the seller. Generally, this type of second mortgage will have a higher rate of interest.

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

Want to discuss the best options for down payments? Call us: 903-482-1123.

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