Putting Together Your Down Payment

Many people who would like to buy a new home can qualify for a mortgage loan, but they don't have much to put up the standard down payment. Below are a few straightforward methods that will help you put together your down payment

Tighten your belt and save. Scrutinize the budget to find extra money to go toward your down payment. You could also try enrolling in an automatic savings plan to have a percentage of your pay automatically moved into your savings account. You might look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or skip a family vacation.

Sell items you don't really need and get a part-time job. Try to get an additional job. This can be rough, but the temporary difficulty can provide your down payment money. Additionally, you can put together a comprehensive list of items you may be able to sell. Unworn gold jewelry can bring a good price from local jewelers. Maybe you own desirable items you can sell on an online auction, or quality household items for a garage or tag sale. Also, you can consider selling any investments you hold.

Tap into your retirement funds. Check the parameters of your retirement program. It is possible to borrow funds from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. Be sure to ask your plan representative about the tax ramifications, your obligation for repayment, and penalties for withdrawing early.

Ask for assistance from generous members of your family. First-time buyers are sometimes fortunate enough to get help with their down payment assistance from thoughtful family members who are anxious to help them get into their own home. Your family members may be eager to help you reach the milestone of owning your first home.

Contact housing finance agencies. Provisional mortgate loan programs are offered to buyers in specific situations, such as low income homebuyers or people looking to remodel homes in a particular neighborhood, among others. Financing through a housing finance agency, you probably will receive a below market interest rate, down payment assistance and other incentives. Housing finance agencies may help eligible homebuyers with a reduced rate of interest, help with your down payment, and offer other advantages. These non-profit programs to build up the value of homes in certain neighborhoods.

Research no-down and low-down mortgage loans.

  • 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 significant role in helping low to moderate-income buyers get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time buyers and others who would not be eligible for a typical mortgage by themselves, by offering mortgage insurance to private lenders. Interest rates for an FHA mortgage usually feature the current interest rate, but the down payment amounts for an FHA mortgage are below those of conventional loans. Closing costs can be financed in the mortgage, and the down payment could be as low as 3% of the purchase price.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This special loan requires no down payment, has mimimal closing costs, and offers a competitive rate of interest. While the mortgages are not actually provided by the VA, the office certifies applicants by providing eligibility certificates.

  • Piggy-back loans

    You can finance your down payment through a second mortgage that closes along with the first. Usually the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. Instead of the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" mortgage, the seller agrees to loan you part of his home equity to assist you with your down payment funds. You would borrow the majority of the purchase price from a traditional lender and borrow the remainder from the seller. Typically you will pay a slightly higher rate on the loan financed by the seller.

No matter your strategy of putting together your down payment, the satisfaction of reaching the goal of living in your own home will be just as sweet!

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