Putting Together Your Down Payment

Lots of borrowers can easily qualify for a mortgage loan, but they don't have a lot of cash to pay the standard down payment. Below are a few straightforward methods that will help you put together your down payment

Reduce expenses and save. Turn your budget upside-down to uncover ways you can cut expenses to save for your down payment. There are bank programs in which some of your paycheck is automatically transferred into savings every pay period. Some effective approaches to build up funds include moving into housing that is less expensive, and staying home for your family vacation this year.

Sell things you don't really need and get a second job. Maybe you can get a second job and build up your earnings. You can also seriously consider the possessions you really need and the items you could be able to put up for sale. A closetful of small items may add up to a nice sum at a garage or tag sale. Also, you might want to think about selling any investments you hold.

Borrow funds from a retirement plan. Investigate the provisions of your particular plan. Some people get down payment money by withdrawing funds from IRAs or borrowing from their 401(k) plans. Make sure you understand the tax ramifications, your obligation for repaying the money, and penalties for withdrawing early.

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

Learn about housing finance agencies. Special mortgage loans are provided to buyers in certain situations, such as low income homebuyers or people planning to renovating homes in a specific area, among others. With the help of a housing finance agency, you can receive an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies can assist eligible homebuyers with a reduced interest rate, help with your down payment, and offer other advantages. The primary mission of non-profit housing finance agencies is boosting home ownership in particular places.

Find out about low-down and no-down mortgages.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in helping low and moderate-income Americans get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time buyers and others who would not be able to qualify for a traditional loan on their own, by providing mortgage insurance to private lenders. Interest rates for an FHA mortgage normally feature the market interest rate, but the down payment requirements with an FHA loan will be lower than those of conventional loans. The required down payment can be as low as 3 percent and the closing costs might be packaged in the mortgage loan.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This specialized loan requires no down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. Although the VA doesn't actually issue the loans, it does certify eligibility to qualify for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. Often the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. The borrower covers the remaining 10%, instead of come up with the typical 20% down payment.

• Carry-Back loans

  With a carry-back mortgage, the seller loans you part of his or her equity. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lending institution and borrow the remainder from the seller. Usually this form of second mortgage will have a higher rate of interest.

The satisfaction will be the same, no matter which strategy you use to come up with the down payment. Your new home will be your reward!

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