Putting Together Your Down Payment

Lots of buyers can qualify for a loan, but they can't afford a large down payment. We have a few ideas

Slash your budget and build up savings. Scrutinize your budget to discover ways you can cut expenses to save for your down payment. You might also decide to enroll in an automatic savings plan at your bank to have a portion of your pay automatically moved into your savings account. 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 close to home for your family vacation.

Work a second job and sell things you do not need. Look for a second job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the items you migh be able to put up for sale. You may own collectibles you can put up for sale on an online auction, or household items for a tag or garage sale. Also, you might want to think about selling any investments you own.

Borrow your down payment from a retirement plan. Investigate the parameters of your particular program. You can borrow funds from a 401(k) for a down payment or get a withdrawal from an IRA. Be sure you comprehend the tax consequences, repayment terms, and early withdrawal penalties.

Request a generous gift from your family. Many buyers are often fortunate enough to receive down payment assistance from thoughtful family members who are prepared to help them get into their own home. Your family members may be eager to help you reach the goal of owning your first home.

Contact housing finance agencies. Provisional loan programs are extended to homebuyers in specific circumstances, like low income homebuyers or people planning to improve houses in a targeted place, among others. Working with a housing finance agency, you probably will be given an interest rate that is below market, down payment assistance and other perks. These kinds of agencies may assist you with a reduced interest rate, get you your down payment, and provide other advantages. These non-profit programs to boost the value of homes in certain neighborhoods.

Find out about low-down and no-down mortgage loans.

• 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 to moderate-income families qualify for mortgage loans. 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 traditional mortgage loan on their own, by providing mortgage insurance to the lenders. Interest rates with an FHA loan usually feature the current interest rate, but the down payment requirements for an FHA loan are below those of conventional loans. The required down payment can go as low as three percent while the closing costs can be packaged 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 does not require a down payment, has reduced closing costs, and provides a competitive interest rate. Even though the mortgages don't originate from the VA, the department certifies applicants by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close along with the first. In most cases the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than come up with the usual 20% down payment.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow a portion of the seller's home equity.. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lending institution and borrow the remaining amount from the seller. Often, this type of second mortgage will have higher interest.

No matter your method of pulling together down payment money, the thrill of owning your own home will be just as great!

Need to talk about the best options for down payments? Call us: (707) 252-2700.