Building Your Down Payment

Lots of borrowers can easily qualify for several different kinds of mortgages, but they don't have much to put up the standard down payment. Do you want to look into getting a new house, but don't know how you should get together your down payment?

Slash your budget and build up savings. Look for ways you can reduce your expenses to set aside money for a down payment. There are bank programs through which some of your paycheck is automatically placed into a savings account every pay period. Some effective ways to put together funds include moving into less expensive housing, and skipping your family vacation for a year or two.

Sell items you do not need and find a part-time job. Try to find a second job. This can be rough, but the temporary difficulty can help you get your down payment. Additionally, you can make a comprehensive list of items you can sell. Broken gold jewelry can be sold at local jewelry stores. A closetful of small items might add up to a fair amount at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Tap into your retirement funds. Investigate the parameters of your retirement program. Many homebuyers get down payment money by withdrawing funds from Individual Retirement Accounts or getting funds out of 401(k) plans. You will want to ensure you understand about any penalties, the effect this may have on your taxes, and repayment obligation.

Ask for a gift from your family. Many buyers somtimes get help with their down payment help from giving parents and other family members who may be anxious to help them get into their own home. Your family members may be pleased to help you reach the goal of buying your first home.

Research housing finance agencies. These agencies provide provisional mortgage loans for low and moderate-income homebuyers, buyers interested in remodeling a home within a particular area, and additional groups as defined by the finance agency. Working through a housing finance agency, you may get a below market interest rate, down payment assistance and other benefits. Housing finance agencies can help you with a lower interest rate, help with your down payment, and offer other benefits. The central goal of not-for-profit housing finance agencies is to promote the purchase of homes in particular areas.

Learn about low-down and no-down mortgage loan programs.

• 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 part in helping low to moderate-income families 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 aids first-time buyers and others who might not be able to qualify for a traditional mortgage loan on their own, by providing mortgage insurance to private lenders. Down payment sums for FHA mortgages are lower than those of conventional mortgage loans, even though these mortgages come with current rates of interest. The required down payment may go as low as three percent while the closing costs might be packaged in the mortgage loan.

• VA mortgages

  VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which typically offers a competitive interest rate, no down payment, and reduced closing costs. While the VA does not issue the mortgage loans, it does issue a certificate of eligibility to apply for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close along with the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. The borrower covers 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 loan you part of his home equity to assist you with your down payment money. You would borrow the largest portion of the purchase price from a traditional lender and finance the remainder with the seller. Typically you'll pay a somewhat higher interest rate on the loan from the seller.

Need to talk about the best options for down payments? Give us a call at 9254610500.