Your Down Payment

Lots of buyers can qualify for a loan, but they can't afford a large down payment. Here's where you start

Cut expenses and save. Look for ways you can trim your monthly expenses to put away money for a down payment. There are bank programs through which some of your paycheck is automatically deposited into a savings account each pay period. You could look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you may move into less expensive housing, or stay close to home for your family vacation.

Sell things you do not really need and find a part-time job. Try to find an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. Additionally, you can put together an exhaustive list of things you can sell. Unworn gold jewelry can be sold at local jewelers. A closetful of small items can add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you own.

Tap into retirement funds. Research the specifics for your particular plan. Many people get down payment money from withdrawing from Individual Retirement Accounts or borrowing from their 401(k) programs. Make sure to ask your plan representative about the tax ramifications, your obligation for repayment, and possible penalties for withdrawing early.

Ask for assistance from generous family members. Many buyers are often fortunate enough to get down payment assistance from caring family members who may be able to help them get into their own home. Your family members may be inclined to help you reach the goal of buying your own home.

Contact housing finance agencies. Special mortgage loans are offered to buyers in certain circumstances, such as low income buyers or buyers looking to renovating homes in a targeted part of town, among others. With the help of this kind of agency, you probably will receive an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies may assist you with a reduced interest rate, help with your down payment, and provide other benefits. The principal mission of non-profit housing finance agencies is to boost the purchase of homes in particular places.

Explore no-down and low-down mortgage loan programs.

• FHA mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in assisting low to moderate-income individuals qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for a home loan. Interest rates with an FHA mortgage typically feature the going interest rate, while the down payment requirements with an FHA loan are smaller than those of conventional loans. The required down payment may go as low as 3 percent while the closing costs could be covered by the mortgage.

• VA mortgage loans

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan requires no down payment, has reduced closing costs, and provides a competitive rate of interest. Even though the VA doesn't provide the mortgages, it does issue a certificate of eligibility to qualify for a VA loan.

• Piggy-back loans

  You may finance a down payment with a second mortgage that closes along with the first. Generally the piggyback loan is for 10 percent of the home's price, while the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, instead of putting the usual 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller agrees to lend you a piece of his own equity to help you with your down payment money. The buyer funds the highest percentage of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Usually you'll pay a slightly higher interest rate with the loan financed by the seller.

No matter how you gather your down payment, the satisfaction 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 9254610500.