Putting Together Your Down Payment

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Lots of people who are looking to buy a new house qualify for various loan programs, but they can't afford a large down payment. Here are a few tips:

Slash the budget and build up savings. Be on the look-out for ways to trim your expenses to set aside funds for a down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a set amount from your paycheck moved into your savings account. You would be wise to look into some big expenses in your spending history that you can do without, or trim, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay local for your vacation.

Work a second job and sell things you don't need. Look for an additional job. This can be rough, but the temporary difficulty can provide your down payment money. You can also seriously consider the possessions you actually need and the things you can put up for sale. A closet full of small items might add up to a fair amount at a garage or tag sale. Also, you might want to think about selling any investments you hold.

Borrow money from your retirement plan. Investigate the provisions of your particular plan. Many homebuyers get down payment money by withdrawing what they need from their IRAs or getting money out of 401(k) programs. Make sure you comprehend the tax consequences, repayment terms, and early withdrawal penalties.

Ask for a generous gift from your family. First-time buyers sometimes receive down payment assistance from thoughtful parents and other family members who may be anxious to help them get into their own home. Your family members may be willing to help you reach the goal of having your own home.

Learn about housing finance agencies. Special mortgage programs are extended to homebuyers in specific situations, such as low income homebuyers or future homeowners planning to renovating houses in a certain place, among others. With the help of a housing finance agency, you may receive a below market interest rate, down payment help and other benefits. Housing finance agencies may help eligible homebuyers with a reduced interest rate, help with your down payment, and offer other benefits. These non-profit programs to promote home ownership in certain places.

Find out about low-down and no-down mortgages.

  • FHA mortgage 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 mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get home financing. FHA offers mortgage insurance to private lenders, helping the buyers to become eligible for financing. Down payment sums for FHA loans are less than those of typical mortgages, although these mortgages hold current interest rates. Closing costs can be covered by the mortgage, while the down payment may be as low as 3% of the total.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterans and service people. This particular loan requires no down payment, has limited closing costs, and provides the benefit of a competitive interest rate. While it's true that the mortgage loans don't originate from the VA, the department certifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase amount, while the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, rather than putting the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to loan you a piece of his own equity to help you get your down payment money. You would borrow the largest portion of the purchase price from a traditional mortgage lending institution and borrow the remainder from the seller. Usually this kind of second mortgage will have a higher rate of interest.

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

Need to talk about the best options for down payments? Call us at (903) 630-7049.

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