Jan

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Down Payment Sources?

Filed Under mortgage 

Editors Note: Due to the mortgage and credit crunch, down payment requirements have increased. If you’re in need of a Denver Home Loan contact us to discuss your mortgage options.

Many buyers look at their cash on hand as their only source for their down payment. This simply is not the case. One way to fund or partially fund a down payment is by using a gift. Parents, grandparents and other family members are often eager to help by making a cash gift toward the purchase of your home. There are also down payment assistance charities that can help you. And, of course, if you are selling a home, the equity you’ve built up can be applied to your down payment.

Another good source for a down payment is to borrow against your employer’s retirement plan.

Many states and counties offer down payment assistant programs for homebuyers. Government down payment assistant programs often have some restrictions, such as the homebuyer must not own any other properties, and the property being purchased has to be the home buyer’s primary residence, etc. Many programs also stipulates that if the homeowner sells the property at a profit or refinances the mortgage to withdraw cash within a certain number of years, the homeowner must repay all or a portion of the funds he received as down payment assistance.

Lots of Gift programs out there. Nehemiah(sp), heart program etc. Just make sure that if it is not an FHA loan that the HUD does not disclose where it is coming from. I had this conversation with Argent and a few other lenders recently and they just do not want to see it on the HUDS that it came from one of these places. Otherwise you are fine. All they want to see is certified funds. FHA, on the other hand, doesn’t care. These programs were designed around FHA and FHA loves them so you can do a 100% FHA loan instead of a 97%.

Often the lender will require the Gift fund to be seasoned or have been in the bank for a certain amount of time.

For those with good credit scores there are 103% programs available. There is no down payment and the 3% is used to cover closing cost. As you can see there are many sources for down payments that you may not be aware of. If you want to buy a home and do not have down payment money available go ahead and contact your mortgage broker and he/she can help you decide what might be best for you.

For borrowers with good credit who can qualify for 100% financing, it may be worth considering speaking to the seller about a seller’s concession to help with up front cash requirements.

Some companies have down payment assistance programs for employees who are relocating at the request of the employer. Others offer low interest rate loans to employees to be used as part of a down payment. Even at companies that have no such programs in place, some may be willing to offer some form of assistance.

Is your rate too high? If you're looking to compare mortgage rates or to get a rate quote on a FHA loan start here


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