Your Down Payment

Lots of people who would like to purchase a new home can qualify for a mortgage loan, but they can't afford a large down payment. Below are a few ways to put together a down payment

Slash the budget and build up savings. Look for ways you can trim your expenses to put away money for a down payment. You could also try enrolling in an automatic savings plan to have a percentage of your pay automatically deposited into savings. You could look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you might move into less expensive housing, or skip a family vacation.

Work a second job and sell items you don't need. Perhaps you can get an additional job to get your down payment money. Additionally, you can make an exhaustive inventory of items you may be able to sell. Unworn gold jewelry can bring a good price from local jewelers. A closetful of small things can add up to a nice sum at a garage or tag sale. You might also look into what any investments you hold will sell for.

Borrow funds from a retirement plan. Research the specifics of your individual plan. Some homebuyers get down payment money from withdrawing what they need from their IRAs or borrowing from 401(k) plans. Make sure to find out about the tax consequences, repayment terms, and any early withdrawal penalties.

Ask for help from family members. First-time homebuyers are sometimes fortunate enough to get down payment help from thoughtful family members who may be willing to help get them in their own home. Your family members may be happy at the chance to help you reach the milestone of owning your own home.

Learn about housing finance agencies. Special mortgage programs are given to buyers in certain situations, like low income buyers or buyers planning to remodel homes in a particular place, among others. With the help of this type of agency, you can get a below market interest rate, down payment help and other advantages. Housing finance agencies may help eligible buyers with a reduced interest rate, get you your down payment, and provide other assistance. These non-profit agencies exist to build up home ownership in certain neighborhoods.

Research no-down and low-down mortgages.

• FHA mortgage loans

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low to moderate-income Americans qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get mortgages. FHA aids first-time homebuyers and others who may not be able to qualify for a traditional mortgage by themselves, by offering mortgage insurance to private lenders. Interest rates with an FHA mortgage typically feature the current interest rate, while the down payment with an FHA loan are lower than those of conventional loans. Closing costs can be covered by the mortgage, and your down payment may be as low as 3% of the total.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan requires no down payment, has reduced closing costs, and offers a competitive rate of interest. Even though the VA doesn't actually provide the mortgages, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. Usually the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage covers 80 percent. Instead of the usual 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to lend you a portion of his own equity to help you get your down payment funds. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Typically, this form of second mortgage has a higher rate of interest.

The feeling of accomplishment will be the same, no matter how you manage to put together your down payment. Your brand new home will be your reward!

Need to talk about your down payment? Call us at 7072522700.