Putting Together Your Down Payment

Many people who are looking to buy a new house qualify for a loan, but they don't have a lot of money to pay a down payment. Want to buy a new house, but don't know how you should put together a down payment?

Slash the budget and build up savings. Scrutinize your budget to find ways you can cut expenses to go toward your down payment. There are bank programs through which a specific portion of your paycheck is automatically transferred into savings every pay period. You could look into some big expenses in your budget that you can live without, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay local for your family vacation.

Sell items you don't need and find 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 sell. Maybe you own collectibles you can sell on an auction website, or quality household items for a tag or garage sale. Also, you might want to look into selling any investments you hold.

Borrow from your retirement funds. Research the specifics for your individual plan. Many homebuyers get down payment money by withdrawing from IRAs or pulling money out of their 401(k) programs. You will want to ensure you know about any penalties, the way this will affect on your taxes, and repayment terms.

Ask for a gift from your family. Many homebuyers somtimes get help with their down payment assistance from caring family members who are eager to help get them in their own home. Your family members may be pleased at the chance to help you reach the milestone of owning your first home.

Contact housing finance agencies. These types of agencies provide provisional mortgage loans for low and moderate-income borrowers, buyers with an interest in renovating a home within a particular area, and additional particular types of buyers as specified by each agency. Working through this kind of agency, you can receive an interest rate that is below market, down payment assistance and other perks. These types of agencies can help eligible buyers with a lower rate of interest, help with your down payment, and offer other advantages. The primary purpose of not-for-profit housing finance agencies is boosting residential ownership in targeted places.

Explore no-down and low-down mortgage loan programs.

• FHA mortgage loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in assisting low to moderate-income individuals get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to qualify for home financing. FHA offers mortgage insurance to private lenders, enabling buyers who might not be eligible for a traditional mortgage, to obtain financing. Interest rates with an FHA loan normally feature the going interest rate, while the down payment requirements for an FHA loan are below those of conventional loans. The required down payment may go as low as three percent and the closing costs might be packaged in the mortgage.

• VA loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which typically offers a reasonable rate of interest, no down payment, and minimal closing costs. Even though the VA doesn't actually issue the mortgage loans, it does certify eligibility to qualify for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes along with the first. Most of the time, the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, instead of come up with the typical 20% down payment.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. You would finance the largest portion of the purchase price with a traditional lending institution and finance the remaining amount with the seller. Typically, this type of second mortgage has higher interest.

No matter your strategy of putting together down payment funds, the satisfaction of owning your own home will be just as great!

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