Building Your Down Payment

Many folks who would like to purchase a new home qualify for various loan programs, but they can't afford a large down payment. Want to look into getting a new house, but don't know how you should put together your down payment?

Slash the budget and build up savings. Scrutinize your budget to discover extra money to go toward your down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a set amount from your take-home pay transferred into your savings account. Some practical strategies to save additional funds include moving into housing that is less expensive, and skipping a year's vacation.

Work more and sell items you do not need. Try to find an additional job. This can be exhausting, but the temporary trial can provide your down payment money. Additionally, you can put together an exhaustive inventory of things you may be able to sell. Unused gold jewelry can bring a good price from local jewelers. You might own desirable items you can put up for sale on an auction website, or quality household goods for a tag or garage sale. You can also explore what any investments you hold may sell for.

Borrow from your retirement funds. Check the parameters of your specific plan. Many people get down payment money from withdrawing what they need from IRAs or getting funds out of 401(k) programs. Make sure you comprehend the tax consequences, repayment terms, and possible early withdrawal penalties.

Ask for assistance from members of your family. Many buyers are sometimes fortunate enough to get help with their down payment assistance from gracious family members who may be anxious to help them get into their first home. Your family members may be inclined to help you reach the goal of having your own home.

Learn about housing finance agencies. Special mortgage loans are offered to buyers in specific circumstances, like low income homebuyers or future homeowners planning to improve houses in a targeted place, among others. Working through this type of agency, you probably will receive a below market interest rate, down payment assistance and other benefits. Housing finance agencies can assist you with a lower rate of interest, help with your down payment, and offer other assistance. These non-profit agencies to build up the value of homes in particular areas.

Learn about low-down and no-down mortgage loan programs.

• FHA loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in assisting low to moderate-income Americans get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgage loans. FHA helps first-time buyers and others who might not be able to qualify for a conventional mortgage by themselves, by providing mortgage insurance to lenders. Interest rates for an FHA loan are generally the going interest rate, while the down payment for an FHA loan are lower than those of conventional loans. The down payment may go as low as three percent while the closing costs can be financed in the mortgage.

• VA mortgage 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 provides the benefit of a competitive rate of interest. While the VA does not finance the mortgages, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  You may fund your down payment using a second mortgage that closes with the first. Most of the time, the piggyback loan is for 10 percent of the purchase amount, and the first mortgage covers 80 percent. The homebuyer pays the remaining 10%, rather than come up with the typical 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to loan you part of his own equity to help you get your down payment money. The buyer funds the majority of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Usually this type of second mortgage will have higher interest.

No matter how you gather your down payment money, the thrill of reaching the goal of living in your own home will be just as great!

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