Putting Together Your Down Payment

Many buyers qualify for a mortgage loan, but they don't have much to put up a down payment. Want to buy a new house, but don't know how you should get together a down payment?

Slash your budget and build up savings. Turn your budget inside out to find ways you can cut expenses to go toward your down payment. There are bank programs in which some of your take-home pay is automatically placed into savings every pay period. Some practical approaches to save additional funds include moving into housing that is less expensive, and skipping a year's vacation.

Work a second job and sell items you don't need. Perhaps you can get an additional job and build up your earnings. Additionally, you can put together a comprehensive inventory of things you may be able to sell. Unworn gold jewelry can be sold at local jewelry stores. A closetful of small things may add up to a fair amount at a garage or tag sale. Also, you might want to consider selling any investments you own.

Tap into your retirement funds. Check the provisions of your retirement plan. Some people get down payment money from withdrawing funds from their IRAs or borrowing from 401(k) plans. You will want to ensure you know about any penalties, the effect this may have on your taxes, and repayment obligation.

Ask for help from family members. First-time buyers somtimes get help with their down payment assistance from caring parents and other family members who are anxious to help them get into their first home. Your family members may be pleased at the chance to help you reach the goal of owning your first home.

Learn about housing finance agencies. These agencies offer provisional mortgage programs to low and moderate-income borrowers, buyers with an interest in renovating a home in a targeted area, and additional certain types of buyers as specified by each agency. Financing through a housing finance agency, you can be given an interest rate that is below market, down payment assistance and other advantages. These kinds of agencies can assist you with a lower interest rate, get you your down payment, and offer other advantages. The main goal of non-profit housing finance agencies is boosting residential ownership in particular parts of the city.

Find out about low-down and no-down mortgages.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income Americans qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, enabling homebuyers who will not be eligible for a conventional mortgage, to receive a mortgage. Interest rates for an FHA loan are usually the current interest rate, while the down payment for an FHA mortgage will be smaller than those of conventional loans. Closing costs might be financed within the mortgage, and your down payment might be as low as 3 percent of the total.

• VA loans

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people qualify for a VA loan, which usually offers a reasonable fixed rate of interest, no down payment, and minimal closing costs. Even though the mortgages don't originate from the VA, the department verfifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. Usually the piggyback loan is for 10 percent of the purchase price, while the first mortgage finances 80 percent. Rather than the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to lend you part of his own equity to assist you with your down payment money. In this scenario, you would finance the largest portion of the purchase price with a traditional lender and finance the remainder with the seller. Often, this type of second mortgage has higher 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 worth it!

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