Your Down Payment

Lots of buyers can qualify for various loan programs, but they can't afford a large down payment. Do you want to look into getting a new home, but aren't sure how you should get together your down payment?

Tighten your belt and save. Be on the look-out for ways to trim your expenditures to put away money for a down payment. Also, you can look into bank programs in which a portion of your take-home pay is automatically transferred into a savings account every pay period. Some effective ways to save additional funds include moving into less expensive housing, and staying home for your family vacation for a year or two.

Work more and sell things you do not need. Perhaps you can find a second job and build up your earnings. In addition, you can put together a comprehensive list of things you can sell. Broken gold jewelry can bring a good amount from local jewelers. Multiple small things can add up to a fair amount at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Borrow from your retirement plan. Explore the specifics for your particular plan. Some people get down payment money from withdrawing from Individual Retirement Accounts or borrowing from 401(k) plans. Make sure you understand the tax ramifications, repayment terms, and early withdrawal penalties.

Request a generous gift from family. First-time homebuyers 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 first home. Your family members may be inclined to help you reach the milestone of owning your own home.

Contact housing finance agencies. These types of agencies offer special mortgage loans for low and moderate-income borrowers, buyers with an interest in renovating a home in a targeted part of the city, and other certain kinds of buyers as defined by each finance agency. Financing through a housing finance agency, you probably will receive a below market interest rate, down payment help and other benefits. These types of agencies can help you with a reduced interest rate, get you your down payment, and provide other assistance. The primary purpose of not-for-profit housing finance agencies is build up the purchase of homes in specific areas.

Explore no-down and low-down mortgage loans.

• FHA mortgage loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income families get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to qualify for mortgage loans. FHA offers mortgage insurance to private lenders, ensuring the buyers are eligible for financing. Down payment requirements for FHA loans are smaller than those of traditional mortgage loans, even though these mortgages have current interest rates. Closing costs may be covered by the mortgage, and the down payment may be as low as 3 percent of the purchase price.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This specialized loan requires no down payment, has mimimal closing costs, and provides a competitive rate of interest. While it's true that the loans don't originate from the VA, the department certifies applicants by providing eligibility certificates.

• Piggy-back loans

  You may fund a down payment with a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan is for 10 percent of the purchase price, while the first mortgage finances 80 percent. The borrower covers the remaining 10%, instead of needing to put together the usual 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to lend you part of his home equity to help you get your down payment money. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Typically you'll pay a slightly higher rate on the loan from the seller.

The feeling of accomplishment will be the same, no matter which method you use to get together your down payment. Your brand new home will be worth it!

Need to talk about the best options for down payments? Give us a call: (707) 252-2700.