Your Down Payment

Lots of folks who are looking to purchase a new house can qualify for various loan programs, but they can't afford a large down payment. Do you want to look into getting a new home, but don't know how to put together a down payment?

Tighten your belt and save. Be on the look-out for ways to trim your expenditures to put away money for a down payment. There are bank programs in which some of your paycheck is automatically transferred into savings 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. Here are a couple of examples: you may decide to move into less expensive housing, or stay close to home for your annual vacation.

Sell items you don't really need and find a second job. Look for a second job. This can be rough, but the temporary difficulty can provide your down payment money. In addition, you can make an exhaustive inventory of things you may be able to sell. Unused gold jewelry can be sold at local jewelry stores. Maybe you own collectibles you can sell on an auction website, or quality household items for a garage or tag sale. Also, you might want to think about selling any investments you own.

Borrow funds from a retirement plan. Check the parameters of your specific program. Some homebuyers get down payment money by withdrawing funds from IRAs or getting money out of 401(k) programs. Make sure to find out about the tax consequences, repayment terms, and early withdrawal penalties.

Ask for assistance from generous family members. Many buyers are sometimes lucky enough to get down payment help from caring parents and other family members who may be eager to help get them in their first home. Your family members may be willing to help you reach the goal of buying your own home.

Research housing finance agencies. These types of agencies provide special loan programs to moderate and low income buyers, buyers interested in remodeling a home within a particular part of the city, and additional groups as specified by the agency. With the help of a housing finance agency, you may get a below market interest rate, down payment assistance and other perks. Housing finance agencies may assist you with a reduced interest rate, get you your down payment, and provide other benefits. The principal mission of non-profit housing finance agencies is to boost the purchase of homes in specific areas.

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

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low to moderate-income Americans get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get mortgage loans. FHA helps first-time buyers and others who would not be eligible for a typical mortgage on their own, by providing mortgage insurance to lenders. Down payment amounts for FHA mortgages are below those of conventional mortgages, although these loans hold current interest rates. Closing costs might be financed in the mortgage, while your down payment may be as low as 3 percent of the purchase price.

• VA loans

  VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a low interest rate, no down payment, and limited closing costs. Although the VA doesn't actually provide the mortgage loans, it does certify eligibility to qualify for a VA loan.

• Piggy-back loans

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

• Carry-Back loans

  In the option of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Generally, this type of second mortgage will have a higher rate of interest.

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

Need to talk about down payments? Give us a call: (707) 252-2700.