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. We have a few ideas

Slash your budget and build up savings. Look for ways you can reduce your expenditures to set aside funds for a down payment. There are bank programs through which a specific portion of your paycheck is automatically placed into a savings account each pay period. You could look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a family vacation.

Work a second job and sell items you do not need. Try to get an additional job. This can be exhausting, but the temporary difficulty can help you get your down payment. Additionally, you can make an exhaustive list of things you may be able to sell. Unworn gold jewelry can bring a good amount from local jewelers. You may have desirable items you can sell on an online auction, or quality household items for a garage or tag sale. Also, you might want to think about selling any investments you own.

Borrow from a retirement plan. Research the details for your particular plan. Some people get down payment money by withdrawing from IRAs or borrowing from their 401(k) plans. Be sure you understand the tax consequences, repayment terms, and any early withdrawal penalties.

Ask for assistance from members of your family. First-time homebuyers somtimes get down payment assistance from giving parents and other family members who may be anxious to help them get into their own home. Your family members may be willing to help you reach the goal of owning your first home.

Contact housing finance agencies. Provisional mortgage loans are offered to homebuyers in specific situations, such as low income buyers or homebuyers planning to remodel homes in a targeted part of town, among others. Financing through a housing finance agency, you may get an interest rate that is below market, down payment assistance and other incentives. These kinds of agencies may assist eligible homebuyers with a reduced rate of interest, help with your down payment, and provide other assistance. These non-profit programs were established to promote community in particular neighborhoods.

Research no-down and low-down mortgages.

• FHA mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low to moderate-income Americans get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who might not be able to qualify for a conventional mortgage on their own, by providing mortgage insurance to private lenders. Down payment requirements for FHA loans are below those for conventional mortgages, although these loans have current interest rates. The required down payment can be as low as 3 percent while the closing costs may be financed in the mortgage loan.

• 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 offers a competitive interest rate. While it's true that the mortgage loans are not actually financed by the VA, the office verfifies applicants by issuing eligibility certificates.

• Piggy-back loans

  You may fund a down payment with a second mortgage that closes with the first. Most of the time, the piggyback loan is for 10 percent of the home's amount, while the first mortgage finances 80 percent. Rather than the usual 20 percent down payment, the buyer just has to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to loan you some of his own equity to help you with your down payment money. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lender and borrow the remainder from the seller. Usually you'll pay a slightly higher rate on the loan financed by the seller.

The satisfaction will be the same, no matter which method you use to pull together your down payment. Your brand new home will be well worth it!

Want to discuss down payments? Call us: (707) 252-2700.