Your Down Payment

Lots of buyers qualify for a loan, but they don't have a lot of money to pay a down payment. Here are a few straightforward ways to put together a down payment

Cut expenses and save. Scrutinize your budget to uncover extra money to go toward your down payment. You might also try enrolling in an automatic savings plan to have a percentage of your payroll automatically deposited into a savings account. You could look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or skip a family vacation.

Sell things you do not really need and find a second job. Maybe you can find a second job and build up your earnings. You can also get creative about the things you can sell. Maybe you have desirable items you can sell at an auction website, or quality household goods for a garage or tag sale. Also, you can look into selling any investments you own.

Borrow from your retirement funds. Explore the specifics for your particular plan. It is possible to take out money from a 401(k) plan for you down payment or make a withdrawal from an Individual Retirement Account. Make sure you are clear about any penalties, the way this will affect on taxes, and repayment terms.

Request a gift from your family. Many homebuyers are sometimes lucky enough to get help with their down payment assistance from caring family members who are eager to help get them in their own home. Your family members may be willing to help you reach the goal of having your first home.

Learn about housing finance agencies. These agencies extend special loan programs to moderate and low income borrowers, buyers with an interest in rehabilitating a house within a specific area, and other specific kinds of buyers as specified by the finance agency. With the help of this kind of agency, you can receive a below market interest rate, down payment help and other perks. These types of agencies may help eligible buyers with a reduced interest rate, get you your down payment, and provide other assistance. The central mission of non-profit housing finance agencies is promoting the purchase of homes in certain parts of the city.

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

  • FHA loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting 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) aids homebuyers who wish to get home financing. FHA aids first-time buyers and others who may not be eligible for a traditional loan by themselves, by providing mortgage insurance to private lenders. Down payment amounts for FHA mortgages are less than those for typical mortgages, although these mortgages have average rates of interest. Closing costs may be included in the mortgage, and your down payment could be as low as 3 percent of the total amount.

  • VA mortgage loans

    VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a competitive fixed rate of interest, no down payment, and minimal closing costs. While 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 a down payment using a second mortgage that closes with the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage finances 80 percent. The borrower pays the remaining 10%, instead of come up with the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you a piece of his own equity to help you get your down payment money. 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. Typically, this kind of second mortgage has a higher rate of interest.

The feeling of accomplishment will be the same, no matter how you manage to pull together your down payment. Your new home will be well worth it!

Need to talk about down payments? Call us at 248-644-1200.

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