Putting Together Your Down Payment

Lots of borrowers qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to buy a new house, but aren't sure how to get together your down payment?

Tighten your belt and save. Look for ways to reduce your expenditures to save toward a down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a specific amount from your take-home pay transferred into a savings account. You would be wise to look into some big expenses in your spending history that you can live without, or reduce, at least temporarily. For example, you may move into less expensive housing, or skip a family vacation.

Work more and sell things you do not need. Perhaps you can get a second job and save your earnings. In addition, you can put together an exhaustive inventory of items you may be able to sell. Unworn gold jewelry can bring a good price from local jewelers. You might have collectibles you can put up for sale at an online auction, or quality household goods for a garage or tag sale. You can also research what your investments will sell for.

Borrow from retirement funds. Research the specifics for your individual plan. It is possible to pull out funds from a 401(k) for you down payment or make a withdrawal from an Individual Retirement Account. You will want to make sure you understand about any penalties, the way this will affect on taxes, and repayment terms.

Ask for assistance from members of your family. First-time buyers are often fortunate enough to get down payment assistance from thoughtful family members who may be prepared to help get them in their own home. Your family members may be inclined to help you reach the goal of owning your first home.

Contact housing finance agencies. These types of agencies provide special loan programs for low and moderate-income homebuyers, buyers with an interest in renovating a residence in a targeted area, and other groups as specified by the agency. With the help of this kind of agency, you may get a below market interest rate, down payment help and other benefits. These types of agencies can assist eligible homebuyers with a reduced interest rate, get you your down payment, and offer other assistance. The central mission of non-profit housing finance agencies is boosting the purchase of homes in specific areas.

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

• FHA mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low and moderate-income families get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in qualifying for mortgage loans. FHA assists first-time homebuyers and others who may not be able to qualify for a conventional mortgage by themselves, by providing mortgage insurance to the lenders. Interest rates for an FHA loan are typically the going interest rate, but the down payment for an FHA mortgage will be below those of conventional loans. Closing costs can be financed within the mortgage, while the down payment might be as low as 3% of the total amount.

• VA mortgage loans

  VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which typically offers a low fixed rate of interest, no down payment, and reduced closing costs. While the VA does not provide the mortgages, it does certify eligibility to qualify for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage covers 80 percent. In contrast to the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to loan you part of his own equity to help you with your down payment money. You would borrow the largest portion of the purchase price from a traditional mortgage lending institution and borrow the remaining amount from the seller. Usually you will pay a somewhat higher interest rate on the loan from the seller.

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

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