Many of us are struggling put together what should be an ideal down payment to purchase a house. A down payment is one of the biggest challenges there is when it comes to getting a mortgage.
If you want to take the long route, you can save up for it. This may take you months or even year but at least you’d know by paying a down payment from this savings, you’re building initial home equity.
To speed things up, some individuals would even consider taking advantage of a personal loan to add to their savings just to meet the required down payment.
But can this be done?
We can’t say it’s a strict “no”, however, this might not be the brightest solution.
A few lenders may consent to use the money from a personal loan to cover the mortgage down payment. This immediately fixes the gap in homeownership.
However, taking a debt for the down payment and then taking an even bigger debt in the form of a mortgage can be a recipe for disaster.
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The good news is there are available options for you to try to help you with the down payment.
There are various types of down payment assistance options first-time and repeat homebuyers can take advantage of.
Down Payment Assistance (DPA)
You can try to apply for a down payment assistance. The great thing about DPA programs is that even if they have qualifications requirements, they aren’t as tough as that of a no down payment mortgage loan.
Down payment assistance programs come in different types, depending on the availability and your needs, you can try qualifying for one.
This type of down payment assistance is given to deserving homebuyer and they are not required to pay it back. This simply means that the assistance has “no strings attached”.
This type of DPA program allows borrowers to focus their energy and resources on repaying the mortgage instead. Consider it a head start to the realization of your homeownership dreams.
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Another type DPA program is the assistance loan. This DPA loan comes free of or with an ultra-low interest. It lets you borrow a money to pay to complete your mortgage down payment and can be structured like a second mortgage.
Second mortgages only become payable if your primary mortgage is paid off completely. In some cases, a DPA loan is a forgivable loan. What this means is that the loan will no longer have to be repaid after some period of time. The only condition is that the home must not be sold and the mortgage must be paid diligently.
A personal loan is a chance to build your credit. Use it to affect your financial situation positively. In this case, a personal loan may not help you if you use it as down payment.
DPA programs, on the other hand, are designed to make homeownership easier for some homebuyers. Make sure you discuss this option with a lender. To find good DPA programs, you may contact an assistance provider near you or you may talk to your lender and ask for any referrals.
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