Your Down Payment

Many people who would like to buy a new house qualify for several different kinds of mortgages, but they don't have a lot of money to put up the standard down payment. Want to look into getting a new house, but don't know how you should put together a down payment?

Reduce expenses and save. Be on the look-out for ways to reduce your monthly expenses to set aside money for a down payment. Also, you can look into bank programs through which some of your take-home pay is automatically placed into a savings account each pay period. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you might move into less expensive housing, or skip a vacation.

Work a second job and sell items you don't need. Look for an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get serious about the possessions you actually need and the items you migh be able to put up for sale. You might have collectibles you can put up for sale on an auction website, or quality household items for a tag or garage sale. You might also explore what any investments you hold will sell for.

Borrow from retirement funds. Research the specifics for your particular plan. Many homebuyers get down payment money from withdrawing from their Individual Retirement Accounts or borrowing from 401(k) programs. Make sure you comprehend the tax ramifications, your obligation for repayment, and possible penalties for withdrawing early.

Ask for help from members of your family. First-time homebuyers are sometimes fortunate enough to receive down payment assistance from giving parents and other family members who may be able to help get them in their own home. Your family members may be willing to help you reach the goal of buying your first home.

Learn about housing finance agencies. Special mortgate loan programs are offered to homebuyers in specific circumstances, such as low income homebuyers or future homeowners planning to improve houses in a specific place, among others. With the help of a housing finance agency, you may be given a below market interest rate, down payment help and other benefits. Housing finance agencies can help eligible buyers with a reduced interest rate, get you your down payment, and offer other assistance. These non-profit agencies were established to promote home ownership in certain neighborhoods.

Research no-down and low-down mortgage loans.

• FHA mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in helping low and moderate-income buyers qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who would not be able to qualify for a typical loan by themselves, by providing mortgage insurance to private lenders. Down payment totals for FHA loans are lower than those with traditional mortgages, although these loans hold current interest rates. The required down payment may be as low as 3 percent while the closing costs could be covered by the mortgage.

• VA loans

  VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which generally offers a low rate of interest, no down payment, and limited closing costs. Even though the mortgages don't originate from the VA, the office verfifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Often the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of needing to pull together the usual 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to loan you part of his own equity to help you with your down payment funds. You would borrow the majority of the purchase price from a traditional mortgage lender and borrow the remaining amount from the seller. Often, this type of second mortgage will have a higher rate of interest.

The feeling of accomplishment will be the same, no matter how you manage to come up with your down payment. Your new home will be well worth it!

Need to talk about your down payment? Give us a call at (707) 252-2700.