Building Your Down Payment

Many buyers qualify for a mortgage loan, but they don't have a lot of money to pay a down payment. Here are a few tips:

Reduce expenses and save. Be on the look-out for ways to trim your expenditures to save toward a down payment. You might also try enrolling in an automatic savings plan to have a percentage of your payroll automatically moved into a savings account. You would be wise to look into some big expenses in your spending history that you can live without, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay close to home for your vacation.

Sell items you do not need and get a second job. Perhaps you can find an additional job to get your down payment money. Additionally, you can put together an exhaustive list of things you can sell. Broken gold jewelry can be sold at local jewelry stores. Maybe you have desirable items you can put up for sale at an auction website, or quality household items for a garage or tag sale. You could also look into what your investments could bring if sold.

Tap into your retirement funds. Explore the details of your particular plan. You may borrow funds from a 401(k) plan for a down payment or get a withdrawal from an Individual Retirement Account. Make sure you understand the tax ramifications, repayment terms, and any early withdrawal penalties.

Ask for a generous gift from your family. First-time buyers are sometimes fortunate enough to receive down payment help from giving family members who are anxious to help them get into their own home. Your family members may be inclined to help you reach the milestone of having your first home.

Contact housing finance agencies. These types of agencies extend special loan programs to low and moderate-income borrowers, buyers with an interest in remodeling a home in a targeted area, and additional certain types of buyers as defined by the agency. Working through a housing finance agency, you probably will be given a below market interest rate, down payment help and other perks. These kinds of agencies can assist you with a reduced rate of interest, help with your down payment, and offer other advantages. These non-profit programs were formed to build up home ownership in certain places.

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

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a significant role in assisting low and moderate-income families get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who might not be eligible for a typical mortgage by themselves, by providing mortgage insurance to the private lenders. Down payment amounts for FHA mortgages are less than those with traditional mortgages, although these mortgages come with average rates of interest. Closing costs can be financed in the mortgage, and the down payment might be as low as 3 percent of the purchase price.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This specialized loan requires no down payment, has limited closing costs, and offers a competitive rate of interest. While it's true that the mortgages are not actually financed by the VA, the office certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Usually the piggyback loan is for 10 percent of the purchase price, and the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to lend you a portion of his own equity to assist you with your down payment funds. In this scenario, you would borrow the largest portion of the purchase price from a traditional mortgage lender and borrow the remaining amount from the seller. Usually this kind of second mortgage has higher interest.

No matter your method of pulling together down payment money, the satisfaction of living in your own home will be just as great!

Need to talk about your down payment? Give us a call: (786) 262-6486.

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