Putting Together Your Down Payment

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Many buyers qualify for various loan programs, but they don't have a lot of money to put up the standard down payment. Here's where to get started

Tighten your belt and save. Scrutinize your budget to discover ways you can cut expenses to save for your down payment. There are bank programs through which a specific portion of your paycheck is automatically placed into savings every pay period. Some practical methods to build up funds include moving into housing that is less expensive, and staying home for your vacation this year.

Sell things you do not need and get a part-time job. Perhaps you can find a second job to get your down payment money. Additionally, you can make a comprehensive inventory of items you can sell. Broken gold jewelry can bring a good amount from local jewelers. A closet full of small things could add up to a fair amount at a garage or tag sale. You might also research what your investments may sell for.

Borrow from your retirement funds. Research the details of your particular plan. Many people get down payment money from withdrawing from IRAs or borrowing from their 401(k) plans. Be sure to find out about the tax ramifications, repayment terms, and penalties for withdrawing early.

Ask for a gift from family. Many homebuyers sometimes get down payment help from caring parents and other family members who are willing to help get them in their first home. Your family members may be willing to help you reach the goal of owning your own home.

Contact housing finance agencies. Special mortgage loans are given to homebuyers in certain situations, such as low income purchasers or people planning to remodel homes in a specific part of town, among others. Financing through a housing finance agency, you can get a below market interest rate, down payment help and other incentives. Housing finance agencies may assist eligible homebuyers with a lower interest rate, get you your down payment, and provide other assistance. The principal mission of not-for-profit housing finance agencies is build up home ownership in particular places.

Find out about low-down and no-down mortgage loan programs.

  • FHA mortgages

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a vital role in helping low to moderate-income individuals qualify for 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 private lenders, making the buyers eligible for a loan. Down payment totals for FHA mortgages are less than those of typical mortgage loans, even though these mortgages have current rates of interest. Closing costs might be included in the mortgage, and the down payment can be as low as 3% of the total.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan assists veterans and service people. This particular loan does not require a down payment, has limited closing costs, and offers a competitive rate of interest. While the VA does not actually finance the loans, it does certify eligibility to qualify for a VA loan.

  • Piggy-back loans

    You may fund a down payment with a second mortgage that closes along with the first. In most cases the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, rather than come up with the typical 20% down payment.

  • Carry-Back loans

    We a seller carries back a second mortgage, the seller loans you part of his or her equity. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Usually you'll pay a slightly higher interest rate on the loan financed by the seller.

No matter your strategy of getting together your down payment, the thrill of reaching the goal of owning your own home will be just as sweet!

Want to discuss your down payment? Give us a call at 310-686-1313.

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