Putting Together Your Down Payment

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Many borrowers can easily qualify for a mortgage loan, but they don't have much to put up the standard down payment. Below are a few straightforward methods that will help you put together your down payment

Tighten your belt and save. Scrutinize the budget to uncover ways you can cut expenses to save for your down payment. You could also try enrolling in an automatic savings plan at your bank to have a portion of your payroll automatically deposited into savings. Some effective approaches to put together funds include moving into less expensive housing, and skipping your vacation for a year or two.

Sell things you do not need and find a part-time job. Look for a second job. This can be rough, but the temporary trial can provide your down payment money. You can also get serious about the possessions you really need and the things you might be able to put up for sale. A closet full of small items can add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you own.

Borrow from retirement funds. Check the parameters of your retirement program. You can pull out funds from a 401(k) for you down payment or get a withdrawal from an IRA. Be sure to find out about the tax consequences, repayment terms, and any penalties for withdrawing early.

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

Research housing finance agencies. These types of agencies provide provisional loan programs to moderate and low income buyers, buyers interested in remodeling a home in a particular part of the city, and additional certain types of buyers as defined by the finance agency. With the help of this kind of agency, you probably will get an interest rate that is below market, down payment help and other incentives. These kinds of agencies may assist you with a reduced interest rate, get you your down payment, and offer other assistance. The principal purpose of not-for-profit housing finance agencies is boosting residence ownership in specific areas.

Research no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in aiding low and moderate-income families qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgages. FHA helps first-time homebuyers and others who may not be able to qualify for a conventional mortgage loan by themselves, by offering mortgage insurance to lenders. Interest rates for an FHA loan are generally the going interest rate, while the down payment with an FHA loan will be lower than those of conventional loans. The down payment may be as low as 3 percent while the closing costs could be packaged in the mortgage loan.

• VA loans

  VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a reasonable interest rate, no down payment, and limited closing costs. Even though the VA doesn't actually provide the mortgage loans, it does certify eligibility to qualify for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. In most cases the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, rather than needing to put together the typical 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to loan you a piece of his home equity to help you with your down payment funds. In this scenario, you would borrow the largest portion of the purchase price from a traditional mortgage lending institution and borrow the remaining amount from the seller. Typically, this type of second mortgage will have higher interest.

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