Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they don't have a lot of money to pay the standard down payment. We have a few suggestions

Tighten your belt and save. Turn your budget upside-down to uncover ways you can cut expenses to save for your down payment. Also, you can look into bank programs in which a portion of your paycheck is automatically transferred into a savings account each pay period. Some practical strategies to save additional funds include moving into a residence that is less expensive, and staying local for your vacation this year.

Work more and sell things you don't need. Perhaps you can get an additional job to get your down payment money. You can also seriously consider the possessions you actually need and the things you can put up for sale. Multiple small items could add up to a fair amount at a garage or tag sale. Also, you can look into selling any investments you own.

Borrow from your retirement plan. Research the specifics for your particular plan. It is possible to borrow funds from a 401(k) for a down payment or get a withdrawal from an Individual Retirement Account. Make sure you understand the tax consequences, your obligation for repaying the money, and any early withdrawal penalties.

Ask for help from generous members of your family. First-time buyers somtimes get help with their down payment assistance from giving family members who may be eager to help them get into their first home. Your family members may be willing to help you reach the goal of owning your own home.

Research housing finance agencies. Provisional mortgate loan programs are offered to homebuyers in specific situations, such as low income buyers or buyers planning to improve houses in a certain place, among others. With the help of this type of agency, you may receive a below market interest rate, down payment assistance and other benefits. These types of agencies can assist eligible buyers with a lower interest rate, help with your down payment, and offer other benefits. These non-profit programs to promote home ownership in certain places.

Find out about low-down and no-down mortgage loan programs.

• FHA mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income families qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting home financing. FHA aids first-time buyers and others who may not be eligible for a typical mortgage by themselves, by providing mortgage insurance to the private lenders. Interest rates for an FHA loan are generally the going interest rate, but the down payment for an FHA loan will be lower than those of conventional loans. Closing costs may be included in the mortgage, while your down payment can be as low as 3 percent of the purchase price.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This special loan does not require a down payment, has limited closing costs, and offers a competitive interest rate. Although the loans are not actually provided by the VA, the department certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  You may finance a down payment through a second mortgage that closes with the first. Usually the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than putting the usual 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller agrees to lend you a piece of his home equity to help you get your down payment funds. In this scenario, you would finance the majority of the purchase price with a traditional lender and borrow the remainder from the seller. Typically you will pay a somewhat higher rate on the loan financed by the seller.

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

Want to discuss your down payment? Call us at (707) 252-2700.