Building Your Down Payment

Lots of buyers can easily qualify for various loan programs, but they can't afford a large down payment. Here are a few ways to get together a down payment

Cut expenses and save. Be on the look-out for ways you can trim your expenditures to save toward a down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a specific amount from your paycheck deposited into savings. You would be wise to look into some big expenses in your budget that you can do without, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or skip a vacation.

Sell items you do not really need and find a second job. Perhaps you can find a second job and build up your earnings. You can also get creative about the things you migh be able to sell. You may have desirable items you can sell on an online auction, or quality household goods for a tag or garage sale. You can also look into what any investments you own could sell for.

Borrow money from a retirement plan. Investigate the parameters of your retirement program. It is possible to take out money from a 401(k) plan for a down payment or perform a withdrawal from an Individual Retirement Account. Be sure you are knowledgable about any penalties, the way this could affect on income taxes, and repayment terms.

Ask for help from generous family members. First-time buyers are often fortunate enough to receive help with their down payment assistance from caring family members who may be willing to help them get into their first home. Your family members may be inclined to help you reach the milestone of buying your own home.

Contact housing finance agencies. Special mortgage programs are offered to buyers in specific situations, such as low income buyers or homebuyers looking to renovating homes in a specific area, among others. Financing through a housing finance agency, you probably will get a below market interest rate, down payment assistance and other advantages. Housing finance agencies may assist eligible homebuyers with a lower interest rate, help with your down payment, and offer other benefits. These non-profit agencies exist to boost home ownership in specific areas.

Research no-down and low-down mortgage loans.

• FHA loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a critical part in aiding low and moderate-income families get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who might not be eligible for a conventional mortgage loan by themselves, by offering mortgage insurance to the lenders. Interest rates for an FHA mortgage are usually the going interest rate, but the down payment with an FHA loan are less than those of conventional loans. The required down payment can go as low as three percent while the closing costs could be covered by the mortgage loan.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This specialized loan does not require a down payment, has mimimal closing costs, and provides a competitive rate of interest. While it's true that the mortgages are not actually issued by the VA, the department certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. Usually the piggyback loan is for 10 percent of the purchase price, and the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to lend you a portion of his home equity to help you with your down payment funds. You would finance the majority of the purchase price with a traditional mortgage lending institution and borrow the remainder from the seller. Typically, this type of second mortgage has higher interest.

No matter how you gather your down payment, the thrill of living in your own home will be just as great!

Want to discuss your down payment? Give us a call at 9254610500.