Putting Together Your Down Payment

Lots of buyers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to buy a new house, but don't know how you should get together your down payment?

Slash your budget and build up savings. Look for ways to trim your monthly expenditures to put away money for a down payment. Also, you can look into bank programs in which a specific portion of your take-home pay is automatically placed into savings each pay period. Some practical strategies to put together funds include moving into less expensive housing, and skipping a year's vacation.

Work a second job and sell items you do not need. Perhaps you can find a second job and build up your earnings. You can also get serious about the possessions you really need and the items you can sell. Multiple small items may add up to a fair amount at a garage or tag sale. Also, you can consider selling any investments you own.

Borrow from a retirement plan. Explore the details of your individual plan. It is possible to take out money from a 401(k) for you down payment or withdraw from an IRA. Be sure to find out about the tax ramifications, repayment terms, and penalties for withdrawing early.

Ask for help from members of your family. First-time homebuyers somtimes receive down payment assistance from caring parents and other family members who may be eager to help them get into their first home. Your family members may be willing to help you reach the milestone of owning your first home.

Research housing finance agencies. These types of agencies offer special loan programs to low and moderate-income borrowers, buyers interested in remodeling a house in a particular part of the city, and other specific types of buyers as defined by each agency. With the help of this kind of agency, you probably will get a below market interest rate, down payment assistance and other advantages. These types of agencies can help you with a reduced rate of interest, get you your down payment, and provide other advantages. These non-profit programs exist to boost community in specific areas.

Research no-down and low-down mortgages.

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income individuals get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, enabling homebuyers who will not qualify for a conventional mortgage loan, to obtain a mortgage. Interest rates with an FHA loan are typically the current interest rate, while the down payment amounts for an FHA loan are lower than those of conventional loans. Closing costs may be included in the mortgage, while your down payment may be as low as 3 percent of the total.

  • VA mortgage loans

    VA loans are backed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a low fixed interest rate, no down payment, and limited closing costs. Even though the VA doesn't actually issue the loans, it does issue a certificate of eligibility to qualify for a VA mortgage.

  • Piggy-back loans

    You can fund your down payment using a second mortgage that closes with the first. Usually the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, instead of come up with the usual 20% down payment.

  • Carry-Back loans

    We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. The buyer funds the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you'll pay a somewhat higher rate on the loan from the seller.

No matter your method of getting together down payment funds, the satisfaction of living in your own home will be just as sweet!

Need to talk about down payments? Give us a call at (973) 601-2122.

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