Putting Together Your Down Payment

Many buyers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to look into getting a new house, but aren't sure how you should get together your down payment?

Cut expenses and save. Turn your budget upside-down to find ways you can cut expenses to save for your down payment. You could also decide to enroll in an automatic savings plan at your bank to automatically have a predetermined portion of your paycheck transferred into savings. Some practical ways to save additional funds include moving into a residence that is less expensive, and staying local for your family vacation for a year or two.

Sell things you do not really need and find a second job. Try to find an additional job. This can be rough, but the temporary trial can help you get your down payment. You can also get creative about the things you could be able to put up for sale. A closetful of small items can add up to a fair amount at a garage or tag sale. You might also explore what your investments may bring if sold.

Borrow your down payment from your retirement plan. Investigate the provisions of your particular program. Some homebuyers get down payment money by withdrawing what they need from Individual Retirement Accounts or taking money out of 401(k) programs. Be sure to learn about the tax consequences, repayment terms, and any early withdrawal penalties.

Ask for a generous gift from family. Many homebuyers are sometimes lucky enough to receive help with their down payment assistance from caring family members who are anxious to help get them in their own home. Your family members may be happy at the chance to help you reach the milestone of buying your own home.

Learn about housing finance agencies. These agencies provide special mortgage loans for low and moderate-income homebuyers, buyers interested in rehabilitating a house in a particular area, and additional specific kinds of buyers as defined by the finance agency. With the help of this kind of agency, you probably will be given an interest rate that is below market, down payment help and other benefits. These types of agencies may assist you with a reduced interest rate, help with your down payment, and offer other assistance. The main purpose of non-profit housing finance agencies is boosting the purchase of homes in certain parts of the city.

Learn about low-down and no-down mortgage loan programs.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in assisting low to moderate-income buyers get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to qualify for mortgage loans. FHA offers mortgage insurance to private lenders, enabling homebuyers who might not qualify for a conventional mortgage loan, to receive home financing. Interest rates for an FHA loan typically feature the current interest rate, while the down payment amounts for an FHA mortgage are lower than those of conventional loans. The down payment may be as low as 3 percent and the closing costs might be included in the mortgage loan.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan does not require a down payment, has limited closing costs, and provides a competitive interest rate. While the VA does not actually issue the mortgage loans, it does certify eligibility to qualify for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. Generally the piggyback loan is for 10 percent of the home's amount, while the first mortgage finances 80 percent. The borrower covers the remaining 10%, rather than having to put together the typical 20% down payment.

  • Carry-Back loans

    With a carry-back mortgage, the you borrow part of the seller's home equity.. You would finance the largest portion of the purchase price with a traditional lender and borrow the remainder from the seller. Usually you will pay a somewhat higher interest rate with the loan from the seller.

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

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

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