Building Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they don't have a large sum of cash to put up a down payment. Do you want to look into getting a new home, but don't know how you should put together your down payment?

Cut expenses and save. Scrutinize your budget to discover ways you can cut expenses to go toward your down payment. You may also decide to enroll in an automatic savings plan at your bank to automatically have a set amount from your take-home pay transferred into your savings account. You could look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. For example, you may move into less expensive housing, or stay local for your vacation.

Sell items you do not really need and get a second job. Maybe you can find an additional job and build up your earnings. Additionally, you can make a comprehensive inventory of things you may be able to sell. Broken gold jewelry can bring a good price from local jewelers. You may have collectibles you can sell at an online auction, or quality household items for a tag or garage sale. You might also explore what any investments you have may bring if sold.

Borrow your down payment from your retirement plan. Check the provisions of your particular program. Many people get down payment money by withdrawing what they need from their Individual Retirement Accounts or taking funds out of their 401(k) programs. Be sure to learn about the tax ramifications, repayment terms, and possible early withdrawal penalties.

Request a generous gift from your family. Many buyers somtimes get help with their down payment assistance from thoughtful family members who are able to help get them in their own home. Your family members may be inclined to help you reach the goal of having your first home.

Research housing finance agencies. Provisional mortgate loan programs are extended to buyers in certain situations, such as low income buyers or future homeowners planning to renovating houses in a targeted neighborhood, among others. With the help of this type of agency, you can be given an interest rate that is below market, down payment help and other benefits. These types of agencies may help you with a reduced rate of interest, help with your down payment, and offer other assistance. These non-profit agencies were established to promote home ownership in certain places.

Learn about low-down and no-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 a vital role in assisting low and moderate-income individuals get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time buyers and others who may not be eligible for a typical loan by themselves, by providing mortgage insurance to the lenders. Down payment requirements for FHA loans are lower than those for conventional mortgages, although these loans hold current interest rates. Closing costs can be included in the mortgage, while your down payment may be as low as 3% of the purchase price.

  • VA loans

    VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a reasonable fixed interest rate, no down payment, and minimal closing costs. Even though the mortgages aren't actually issued by the VA, the office verfifies applicants by providing 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 price, and the first mortgage covers 80 percent. The homebuyer covers 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 home equity. In this scenario, you would borrow the largest portion of the purchase price from a traditional lender and finance the remainder with the seller. Generally, this type of second mortgage will have higher interest.

The satisfaction will be the same, no matter how you manage to come up with your down payment. Your new home will be worth it!

Want to discuss the best options for down payments? Call us: 720-598-8300.

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