Building Your Down Payment

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Many buyers qualify for various loan programs, but they don't have a large sum of cash to put up the standard down payment. Want to buy a new house, but don't know how to get together a down payment?

Tighten your belt and save. Be on the look-out for ways you can reduce your monthly expenses to save toward a down payment. There are bank programs in which a portion of your paycheck is automatically deposited into a savings account each pay period. Some practical ways to build up funds include moving into a residence that is less expensive, and staying home for your vacation for a year or two.

Work more and sell items you don't need. Perhaps you can find an additional job and save your earnings. You can also get serious about the possessions you really need and the things you could be able to put up for sale. Multiple small things might add up to a fair amount at a garage or tag sale. You might also research what your investments will sell for.

Tap into retirement funds. Investigate the parameters of your particular plan. It is possible to take out money from a 401(k) for you down payment or get a withdrawal from an IRA. Make sure you comprehend the tax consequences, repayment terms, and early withdrawal penalties.

Request a generous gift from your family. First-time buyers are often lucky enough to receive help with their down payment help from gracious family members who may be willing to help get them in 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 agencies provide provisional mortgage loan programs- for moderate and low income homebuyers, buyers with an interest in remodeling a home within a targeted area, and additional groups as defined by the finance agency. With the help of this type of agency, you can be given an interest rate that is below market, down payment help and other advantages. These kinds of agencies may help eligible homebuyers with a reduced rate of interest, help with your down payment, and offer other assistance. The main mission of not-for-profit housing finance agencies is promoting the purchase of homes in specific places.

Explore no-down and low-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 significant part in aiding low to moderate-income families get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgage loans. FHA provides mortgage insurance to private lenders, helping the buyers to become eligible for a loan. Down payment amounts for FHA mortgages are smaller than those of traditional mortgage loans, even though these loans hold average interest rates. Closing costs might be covered by the mortgage, while your down payment may be as low as 3 percent of the purchase price.

  • VA mortgages

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a reasonable fixed rate of interest, no down payment, and minimal closing costs. While it's true that the loans don't originate from the VA, the office certifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Most of the time, the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, rather than needing to put together the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to lend you a portion of his own equity to help you get your down payment funds. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually this form of second mortgage will have a higher rate of interest.

No matter your strategy of pulling together your down payment money, the satisfaction of owning your own home will be just as sweet!

Want to discuss your down payment? Give us a call: 503-243-5626.

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