Putting Together Your Down Payment

Lots of borrowers can qualify for various loan programs, but they don't have a lot of money to pay a down payment. Want to buy a new house, but don't know how you should get together your down payment?

Slash your budget and build up savings. Look for ways to reduce your expenditures to put away money for a down payment. Also, you can look into bank programs through which some of your take-home pay is automatically placed into savings every pay period. You would be wise to look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you may move into less expensive housing, or skip a vacation.

Work a second job and sell items you do not need. Look for an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. In addition, you can put together an exhaustive inventory of items you can sell. Broken gold jewelry can be sold at local jewelry stores. You might have collectibles you can sell at an online auction, or quality household items for a garage or tag sale. You could also research what your investments may sell for.

Tap into your retirement funds. Investigate the provisions of your retirement program. It is possible to borrow money from a 401(k) for you down payment or withdraw from an IRA. Be sure to learn about the tax consequences, your obligation for repaying funds, and penalties for withdrawing early.

Ask for a gift from your family. Many homebuyers are often fortunate enough to receive down payment assistance from giving parents and other family members who are eager to help them get into their first home. Your family members may be willing to help you reach the goal of buying your own home.

Contact housing finance agencies. Provisional loan programs are offered to buyers in specific circumstances, like low income buyers or homebuyers planning to renovating houses in a specific area, among others. With the help of a housing finance agency, you probably will be given a below market interest rate, down payment assistance and other incentives. These types of agencies may assist you with a reduced interest rate, help with your down payment, and provide other advantages. The principal goal of not-for-profit housing finance agencies is promoting residential ownership in certain parts of the city.

Find out about low-down and no-down mortgage loan programs.

• FHA 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 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 individuals in getting mortgage loans. FHA assists first-time buyers and others who may not be eligible for a conventional mortgage loan on their own, by offering mortgage insurance to the private lenders. Interest rates with an FHA loan are typically the current interest rate, while the down payment requirements with an FHA loan are below those of conventional loans. Closing costs may be included in the mortgage, and your down payment may be as low as 3 percent of the total amount.

• VA mortgages

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans are eligible for a VA loan, which typically offers a reasonable fixed rate of interest, no down payment, and minimal closing costs. Although the VA does not provide the loans, it does certify eligibility to qualify for a VA loan.

• Piggy-back loans

  You may fund your down payment with a second mortgage that closes at the same time as the first. Usually the piggyback loan is for 10 percent of the purchase price, and the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, rather than come up with the usual 20% down payment.

• Carry-Back loans

  With a carry-back mortgage, the you borrow part of the seller's home equity.. In this scenario, you would borrow the majority of the purchase price from a traditional lending institution and finance the remaining amount with the seller. Usually this form of second mortgage has higher interest.

No matter your method of pulling together down payment funds, the thrill of owning your own home will be just as sweet!

Want to discuss down payment options? Call us at 7072522700.