Your Down Payment

Lots of buyers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to look into getting a new home, but don't know how to put together your down payment?

Tighten your belt and save. Look for ways you can reduce your monthly expenditures to save toward a down payment. Also, you can look into bank programs in which a portion of your take-home pay is automatically deposited into savings each pay period. Some practical strategies to save additional funds include moving into less expensive housing, and staying home for your vacation for a year or two.

Sell things you do not need and get a second job. Try to get a second job. This can be rough, but the temporary difficulty can provide your down payment money. You can also get creative about the things you can put up for sale. A closetful of small items could add up to a fair amount at a garage or tag sale. Also, you might want to consider selling any investments you own.

Borrow from a retirement plan. Research the details for your individual plan. It is possible to borrow funds from a 401(k) plan for you down payment or withdraw from an IRA. You will want to be sure you know about any penalties, the way this will affect on your taxes, and repayment obligation.

Request a gift from family. Many homebuyers somtimes get help with their down payment help from gracious parents and other family members who may be eager to help them get into their own home. Your family members may be eager to help you reach the goal of buying your own home.

Contact housing finance agencies. Special mortgage loans are provided to buyers in certain circumstances, such as low income purchasers or people planning to remodel houses in a specific part of town, among others. With the help of this kind of agency, you can receive a below market interest rate, down payment help and other incentives. Housing finance agencies can assist you with a lower interest rate, help with your down payment, and offer other advantages. These non-profit agencies were formed to promote the value of homes in specific neighborhoods.

Explore no-down and low-down mortgage loans.

  • FHA loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low and moderate-income Americans qualify for 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 might not be able to qualify for a traditional mortgage by themselves, by offering mortgage insurance to the private lenders. Interest rates with an FHA mortgage are usually the going interest rate, but the down payment for an FHA mortgage will be below those of conventional loans. Closing costs can be financed within the mortgage, and your down payment might be as low as 3 percent of the purchase price.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This particular loan does not require a down payment, has mimimal closing costs, and provides the benefit of a competitive rate of interest. Although the VA does not actually finance the mortgages, it does issue a certificate of eligibility to apply for a VA loan.

  • Piggy-back loans

    You can finance your down payment using a second mortgage that closes with the first. In most cases the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The borrower pays the remaining 10%, instead of putting the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to loan you a portion of his home equity to help you get your down payment money. In this scenario, you would borrow the majority of the purchase price from a traditional lending institution and borrow the remainder from the seller. Usually you will pay a slightly higher rate with the loan financed by the seller.

No matter your strategy of getting together your down payment, the satisfaction of reaching the goal of living in your own home will be just as great!

Want to discuss the best options for down payments? Give us a call at (718) 639-9500.

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