Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they don't have a lot of money to put up the standard down payment. Below are a few ways to put together your down payment

Cut expenses and save. Look for ways you can reduce your monthly expenses to save toward a down payment. You also could enroll in an automatic savings plan to automatically have a predetermined amount from your take-home pay moved into a savings account. You would be wise to look into some big expenses in your budget that you can do without, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay close to home for your vacation.

Sell things you do not need and get a second job. Perhaps you can find an additional job to get your down payment money. You can also get creative about the items you may be able to sell. You may have collectibles you can put up for sale on an auction website, or household items for a garage or tag sale. Also, you might want to think about selling any investments you own.

Borrow from your retirement plan. Investigate the parameters of your retirement program. Many people get down payment money from withdrawing from their Individual Retirement Accounts or borrowing from their 401(k) plans. You will want to be sure you know about any penalties, the effect this could have on your income taxes, and repayment obligation.

Request a gift from your family. First-time homebuyers are sometimes lucky enough to get down payment help from gracious parents and other family members who may be prepared to help get them in their own home. Your family members may be willing to help you reach the milestone of owning your own home.

Research housing finance agencies. Provisional mortgage programs are offered to homebuyers in specific situations, such as low income purchasers or people planning to improve homes in a specific area, among others. Working through a housing finance agency, you may get an interest rate that is below market, down payment help and other advantages. Housing finance agencies may assist you with a lower interest rate, get you your down payment, and offer other advantages. These non-profit agencies were formed to boost the value of homes in specific places.

Research no-down and low-down mortgages.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a vital part in assisting low to moderate-income buyers qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a loan. Down payment amounts for FHA mortgages are below those of typical mortgage loans, although these mortgages hold average rates of interest. Closing costs might be included in the mortgage, while your down payment can be as low as 3% of the total.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan does not require a down payment, has reduced closing costs, and provides a competitive rate of interest. Although the VA does not finance the mortgage loans, it does certify eligibility to apply for a VA loan.

• Piggy-back loans

  You can fund your down payment with a second mortgage that closes with the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than needing to pull together the typical 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to loan you part of his home equity to help 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 somewhat higher rate on the loan financed by the seller.

No matter how you gather your down payment funds, the satisfaction of reaching the goal of living in your own home will be just as sweet!

Want to discuss down payments? Give us a call at 7072522700.