Building Your Down Payment

Lots of borrowers qualify for various loan programs, but they can't afford a large down payment. Want to look into getting a new home, but don't know how you should put together a down payment?

Tighten your belt and save. Turn your budget inside out to uncover ways you can cut expenses to go toward your down payment. Also, you can look into bank programs through which some of your take-home pay is automatically placed into a savings account every pay period. Some practical methods to put together funds include moving into a residence that is less expensive, and skipping a year's vacation.

Work a second job and sell items you don't need. Try to find a second job. This can be rough, but the temporary trial can provide your down payment money. You can also get serious about the possessions you actually need and the items you can sell. You might own desirable items you can sell at an auction website, or household items for a tag or garage sale. You can also research what your investments will bring if sold.

Borrow from your retirement plan. Check the provisions of your specific program. Many homebuyers get down payment money from withdrawing from IRAs or taking money out of their 401(k) plans. Be sure you comprehend the tax ramifications, repayment terms, and possible penalties for withdrawing early.

Ask for help from generous family members. Many buyers are often fortunate enough to receive down payment help from caring family members who are able to help get them in their first home. Your family members may be eager to help you reach the milestone of owning your own home.

Research housing finance agencies. These agencies offer special mortgate loan programs- for low and moderate-income homebuyers, buyers with an interest in sprucing up a home in a specific part of the city, and additional groups as defined by each agency. Working with a housing finance agency, you may receive a below market interest rate, down payment help and other benefits. Housing finance agencies can assist you with a lower interest rate, get you your down payment, and offer other benefits. These non-profit agencies to boost community in particular places.

Explore no-down and low-down mortgage loan programs.

  • FHA loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low to moderate-income buyers qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who need to get mortgages. FHA offers mortgage insurance to the private lenders, enabling buyers who will not qualify for a typical mortgage, to receive a mortgage. Interest rates with an FHA loan are generally the market interest rate, while the down payment requirements for an FHA loan are smaller than those of conventional loans. The required down payment may go as low as three percent and the closing costs can be financed in the mortgage.

  • VA loans

    VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people are eligible for a VA loan, which generally offers a low fixed interest rate, no down payment, and minimal closing costs. While the VA does not provide the mortgages, it does issue a certificate of eligibility to qualify for a VA loan.

  • Piggy-back loans

    You can fund your down payment with a second mortgage that closes with the first. Generally the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. In contrast to the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    We a seller carries back a second mortgage, the you borrow a portion of the seller's home equity.. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you'll pay a somewhat higher rate with the loan financed by the seller.

No matter your method of pulling together your down payment, the thrill of reaching the goal of living in your own home will be just as sweet!

Want to discuss down payments? Call us at (718) 477-4405.

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