Building Your Down Payment

Lots of people who are looking to buy a new house can easily qualify for several different kinds of mortgages, but they don't have a large sum of cash to put up a down payment. Here are a few ways to get together a down payment

Tighten your belt and save. Look for ways you can reduce your expenses to set aside money for a down payment. There are bank programs through which some of your paycheck is automatically deposited into savings each pay period. Some effective ways to put together funds include moving into less expensive housing, and staying local for your vacation this year.

Sell items you don't really need and find a second job. Try to get an additional job. This can be exhausting, but the temporary trial can help you get your down payment. You can also get creative about the items you may be able to sell. A closetful of small items can add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you hold.

Borrow money from a retirement plan. Investigate the provisions of your particular plan. It is possible to borrow funds from a 401(k) plan for a down payment or get a withdrawal from an Individual Retirement Account. You will need to ensure you know about any penalties, the effect this may have on your income taxes, and repayment obligation.

Ask for a generous gift from your family. First-time homebuyers somtimes receive help with their down payment assistance from caring family members who may be eager to help get them in their first home. Your family members may be willing to help you reach the goal of buying your own home.

Contact housing finance agencies. Special loan programs are offered to buyers in certain circumstances, such as low income homebuyers or future homeowners looking to improve homes in a specific place, among others. With the help of a housing finance agency, you can be given an interest rate that is below market, down payment assistance and other advantages. These types of agencies can help you with a reduced interest rate, help with your down payment, and provide other advantages. The main mission of not-for-profit housing finance agencies is promoting the purchase of homes in specific areas.

Explore no-down and low-down mortgage loans.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low and moderate-income Americans qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who wish to get mortgages. FHA provides mortgage insurance to the private lenders, enabling new homebuyers who will not qualify for a conventional mortgage loan, to get a mortgage. Down payment sums for FHA mortgages are less than those for typical mortgage loans, although these loans hold average interest rates. Closing costs can be covered by the mortgage, while the down payment might be as low as 3 percent of the total.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This particular loan requires no down payment, has limited closing costs, and provides a competitive interest rate. While it's true that the mortgage loans don't originate from the VA, the office certifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close with the first. Usually the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than come up with the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to loan you some of his own equity to assist you with your down payment funds. You would finance the largest portion of the purchase price with a traditional lending institution and borrow the remaining amount from the seller. Typically, this form of second mortgage has higher interest.

No matter how you gather your down payment, the satisfaction of living in your own home will be just as great!

Need to talk about the best options for down payments? Call us at 720-598-8300.

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