Putting Together Your Down Payment

Many buyers can easily qualify for various loan programs, but they can't afford a large down payment. Do you want to buy a new house, but don't know how to put together a down payment?

Slash your budget and build up savings. Look for ways you can trim your expenses to put away money for a down payment. You also could enroll in an automatic savings plan to have a portion of your pay automatically moved into savings. Some practical approaches to put together funds include moving into housing that is less expensive, and staying local for your family vacation for a year or two.

Work more and sell items you do not need. Maybe you can find an additional job to get your down payment money. You can also seriously consider the possessions you actually need and the items you may be able to sell. Multiple small items may add up to a fair amount at a garage or tag sale. Also, you can look into selling any investments you hold.

Borrow funds from your retirement plan. Investigate the provisions of your particular program. It is possible to pull out money from a 401(k) for you down payment or withdraw from an Individual Retirement Account. Be sure you understand about any penalties, the way this will affect on taxes, and repayment obligation.

Request a generous gift from family. Many buyers are often fortunate enough to get down payment assistance from giving parents and other family members who may be eager to help get them in their first home. Your family members may be happy at the chance to help you reach the goal of having your first home.

Contact housing finance agencies. Special mortgage loans are extended to homebuyers in certain circumstances, like low income buyers or people looking to remodel houses in a specific area, among others. Financing with this type of agency, you probably will be given a below market interest rate, down payment help and other advantages. Housing finance agencies can help eligible buyers with a lower interest rate, get you your down payment, and provide other assistance. These non-profit programs exist to boost the value of homes in certain areas.

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

• Federal Housing Administration (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 part in helping low and moderate-income families get mortgages. 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, enabling homebuyers who will not qualify for a traditional loan, to receive a mortgage. Interest rates for an FHA loan are generally the going interest rate, while the down payment with an FHA loan will be smaller than those of conventional loans. The required down payment may be as low as three percent while the closing costs could be covered by the mortgage loan.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan does not require a down payment, has mimimal closing costs, and offers a competitive rate of interest. 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 you close along with the first. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. In contrast to the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  We a seller carries back a second mortgage, the seller loans you part of his or her equity. In this scenario, you would borrow the largest portion of the purchase price from a traditional lender and finance the remaining amount with the seller. Usually you'll pay a somewhat higher interest rate with the loan from the seller.

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

Need to talk about your down payment? Give us a call at 7072522700.