Putting Together Your Down Payment

Many people who are looking to purchase a new house can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Here are a few ways to get together your down payment

Slash your budget and build up savings. Scrutinize your budget to find extra money to save for your down payment. There are bank programs in which a portion of your take-home pay is automatically deposited into savings each pay period. Some practical methods to build up funds include moving into less expensive housing, and staying local for your vacation for a year or two.

Work more and sell items you do not need. Perhaps you can find a second job and save your earnings. You can also get serious about the possessions you really need and the items you could be able to put up for sale. A closetful of small items could add up to a nice sum at a garage or tag sale. You could also research what any investments you hold may bring if sold.

Tap into your retirement funds. Explore the specifics of your particular plan. Many homebuyers get down payment money from withdrawing funds from their IRAs or getting funds out of 401(k) plans. You will want to make sure you are clear about any penalties, the way this may affect on your taxes, and repayment obligation.

Ask for a generous gift from your family. First-time buyers somtimes receive down payment help from giving family members who are able to help get them in their own home. Your family members may be happy at the chance to help you reach the goal of owning your own home.

Learn about housing finance agencies. Special mortgate loan programs are given to homebuyers in specific situations, like low income purchasers or buyers looking to renovating houses in a particular part of town, among others. With the help of this type of agency, you may be given an interest rate that is below market, down payment help and other benefits. Housing finance agencies can assist eligible homebuyers with a lower rate of interest, get you your down payment, and provide other assistance. These non-profit programs were established to boost community in specific areas.

Find out about low-down and no-down mortgage loans.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low to moderate-income individuals get mortgage loans. An office 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 may not be able to qualify for a traditional mortgage loan by themselves, by offering mortgage insurance to the lenders. Down payment sums for FHA loans are below those of traditional mortgage loans, although these loans come with current rates of interest. The required down payment may go as low as three percent and the closing costs can be packaged in the mortgage.

  • VA mortgages

    VA loans are backed by the Department of Veterans Affairs. Veterens and service people can qualify for a VA loan, which generally offers a reasonable fixed rate of interest, no down payment, and reduced closing costs. Although the VA does not provide the mortgage loans, it does certify eligibility to apply for a VA mortgage.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close with the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you a piece of his home equity to help you get your down payment funds. The buyer funds the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually this form of second mortgage has higher interest.

The satisfaction will be the same, no matter how you manage to come up with the down payment. Your brand new home will be worth it!

Want to discuss down payment options? Give us a call at (916) 399-5500.

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