Putting Together Your Down Payment

Many buyers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Here are a few methods that will help you put together a down payment

Cut expenses and save. Scrutinize your budget to find ways you can cut expenses to save for your down payment. You also might enroll in an automatic savings plan at your bank to have a percentage of your pay automatically moved into savings. You might look into some big expenses in your spending history that you can do without, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or stay close to home for your annual vacation.

Work a second job and sell items you don't need. Look for an additional job. This can be exhausting, but the temporary trial can provide your down payment money. You can also get serious about the possessions you really need and the items you migh be able to sell. Multiple small items can add up to a nice sum at a garage or tag sale. You might also research what your investments may sell for.

Borrow funds from your retirement plan. Research the specifics of your particular plan. Many people get down payment money by withdrawing funds from Individual Retirement Accounts or borrowing from their 401(k) programs. Make sure you know about any penalties, the way this will affect on your taxes, and repayment terms.

Ask for a generous gift from family. Many buyers somtimes get down payment assistance from gracious parents and other family members who may be willing to help them get into their first home. Your family members may be eager to help you reach the milestone of having your own home.

Contact housing finance agencies. Special loan programs are extended to homebuyers in specific situations, like low income buyers or buyers planning to improve homes in a certain place, among others. Financing through a housing finance agency, you probably will receive an interest rate that is below market, down payment assistance and other perks. Housing finance agencies can help eligible buyers with a lower interest rate, help with your down payment, and offer other advantages. These non-profit programs to boost the value of homes in certain places.

Explore no-down and low-down mortgages.

• Federal Housing Administration (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 aiding low to moderate-income families qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to get mortgages. FHA assists first-time homebuyers and others who might not be eligible for a conventional loan on their own, by offering mortgage insurance to the lenders. Down payment amounts for FHA loans are less than those of traditional mortgages, even though these mortgages have current rates of interest. The down payment can go as low as 3 percent and the closing costs might be financed in the mortgage.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This specialized loan does not require a down payment, has limited closing costs, and provides the advantage of a competitive rate of interest. Even though the loans are not actually provided by the VA, the office certifies applicants by issuing eligibility certificates.

• Piggy-back loans

  You may fund a down payment with a second mortgage that closes along with the first. Most of the time, the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. The borrower pays the remaining 10%, rather than come up with the typical 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to lend you part of his own equity to help you get your down payment funds. In this scenario, you would borrow the largest portion of the purchase price from a traditional lending institution and borrow the remaining amount from the seller. Usually this form of second mortgage has higher interest.

Want to discuss the best options for down payments? Give us a call at 9254610500.