Your Down Payment

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Lots of borrowers qualify for a loan, but they can't afford a large down payment. Do you want to look into getting a new home, but aren't sure how to get together a down payment?

Tighten your belt and save. Be on the look-out for ways to reduce your monthly expenses to save toward a down payment. You might also try enrolling in an automatic savings plan at your bank to have a portion of your payroll automatically moved into a savings account. You could look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you may decide to move into less expensive housing, or skip a vacation.

Sell things you do not really need and find a second job. Look for an additional job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get serious about the possessions you really need and the things you can sell. You might have desirable items you can put up for sale on an auction website, or quality household goods for a tag or garage sale. Also, you can consider selling any investments you own.

Borrow from retirement funds. Research the specifics for your individual plan. Many people get down payment money by withdrawing what they need from their IRAs or borrowing from 401(k) plans. You will need to ensure you know about any penalties, the effect this may have on taxes, and repayment obligation.

Ask for help from generous members of your family. First-time homebuyers are sometimes fortunate enough to receive help with their down payment assistance from gracious family members who may be anxious to help them get into their own home. Your family members may be eager to help you reach the goal of having your first home.

Learn about housing finance agencies. These types of agencies offer provisional loan programs to moderate and low income buyers, buyers interested in remodeling a residence in a targeted part of the city, and other groups as defined by each agency. Working with this kind of agency, you probably will get an interest rate that is below market, down payment assistance and other perks. These kinds of agencies can assist you with a lower interest rate, get you your down payment, and offer other benefits. These non-profit agencies exist to build up community in specific places.

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

  • FHA mortgages

    The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in aiding low to moderate-income Americans qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who may not be eligible for a traditional mortgage by themselves, by providing mortgage insurance to the lenders.  The down payment may be as low as 3.5 percent and the closing costs may be covered by the seller up to 6%.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This special loan requires no down payment and provides the advantage of a competitive interest rate. Although the loans are not actually provided by the VA, the department certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes at the same time as the first. Usually the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. In contrast to the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you a piece of his own equity to assist you with your down payment funds. You would finance the majority of the purchase price with a traditional mortgage lending institution and borrow the remainder from the seller. Typically, this form of second mortgage has a higher rate of interest.

The feeling of accomplishment will be the same, no matter which method you use to pull together your down payment. Your brand new home will be your reward!
Want to discuss down payments? Call us at 727-393-9399.

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