Your Down Payment

Many folks who would like to purchase a new house can easily qualify for various loan programs, but they can't afford a large down payment. We have a few ideas

Tighten your belt and save. Look for ways to reduce your expenses to save toward a down payment. Also, you can look into bank programs through which a specific portion of your take-home pay is automatically deposited into savings every pay period. You would be wise to look into some big expenses in your spending history that you can give up, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or stay close to home for your vacation.

Work a second job and sell things you don't need. Try to get a second job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the things you may be able to put up for sale. You may have desirable items you can sell on an auction website, or quality household items for a garage or tag sale. You could also explore what your investments could sell for.

Borrow money from your retirement plan. Investigate the parameters of your retirement plan. Many homebuyers get down payment money by withdrawing funds from IRAs or pulling funds out of their 401(k) programs. Make sure you know about any penalties, the way this could affect on your income taxes, and repayment obligation.

Request a generous gift from your family. First-time buyers are often lucky enough to get help with their down payment assistance from gracious family members who are prepared to help them get into their first home. Your family members may be willing to help you reach the goal of owning your own home.

Research housing finance agencies. Provisional mortgage programs are extended to buyers in certain circumstances, like low income homebuyers or homebuyers looking to improve homes in a specific neighborhood, among others. Financing through this type of agency, you may receive a below market interest rate, down payment help and other incentives. These types of agencies may assist you with a lower interest rate, help with your down payment, and offer other assistance. These non-profit agencies exist to boost the value of homes in specific areas.

Explore no-down and low-down mortgages.

  • Federal Housing Administration (FHA) loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in aiding low and moderate-income Americans get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for financing. Down payment sums for FHA loans are smaller than those with typical mortgage loans, even though these mortgages have current interest rates. The required down payment can go as low as 3 percent and the closing costs may be covered by the mortgage loan.

  • VA mortgage loans

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a reasonable interest rate, no down payment, and minimal closing costs. Although the VA doesn't provide the loans, it does issue a certificate of eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    You may finance a down payment through a second mortgage that closes with the first. Most of the time, the piggyback loan is for 10 percent of the home's price, while the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    With a carry-back mortgage, the seller loans you part of his or her home equity. You would finance the largest portion of the purchase price with a traditional mortgage lender and finance the remaining amount with the seller. Typically you will pay a slightly higher rate with the loan from the seller.

No matter how you gather down payment funds, the satisfaction of reaching the goal of owning your own home will be just as great!

Want to discuss your down payment? Give us a call at (718) 477-4405.

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