Putting Together Your Down Payment

Lots of borrowers can qualify for a loan, but they can't afford a large down payment. Here are a few tips:

Slash the budget and build up savings. Be on the look-out for ways you can trim your monthly expenditures to put away money for a down payment. You also might enroll in an automatic savings plan at your bank to automatically have a predetermined amount from your paycheck transferred into savings. You might look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay close to home for your annual vacation.

Work more and sell things you don't need. Try to find a second job. This can be exhausting, but the temporary trial can provide your down payment money. Additionally, you can put together a comprehensive inventory of items you can sell. Unused gold jewelry can be sold at local jewelry stores. Multiple small items can add up to a fair amount at a garage or tag sale. Also, you might want to look into selling any investments you own.

Borrow money from your retirement plan. Explore the details of your particular plan. You may borrow funds from a 401(k) for you down payment or withdraw from an IRA. Be sure you understand the tax ramifications, repayment terms, and possible early withdrawal penalties.

Ask for a generous gift from your family. First-time buyers somtimes get help with their down payment assistance from caring parents and other family members who are eager to help get them in their own home. Your family members may be eager to help you reach the goal of owning your first home.

Learn about housing finance agencies. Provisional loan programs are offered to buyers in certain situations, like low income purchasers or buyers looking to remodel houses in a particular part of town, among others. With the help of a housing finance agency, you may get a below market interest rate, down payment help and other benefits. Housing finance agencies may help eligible buyers with a reduced rate of interest, help with your down payment, and offer other benefits. These non-profit programs to promote community in certain areas.

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

• Federal Housing Administration (FHA) mortgages

  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 aiding low and moderate-income Americans get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who might not be eligible for a typical mortgage loan on their own, by providing mortgage insurance to the lenders. Down payment totals for FHA mortgages are lower than those with typical mortgages, although these mortgages hold average rates of interest. The down payment may be as low as 3 percent and the closing costs can be covered by the mortgage.

• VA loans

  With a guarantee from 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 limited closing costs, and offers a competitive interest rate. Although the VA doesn't actually finance the loans, it does issue a certificate of eligibility to apply for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close with the first. Most of the time, the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than putting the typical 20% down payment.

• Carry-Back loans

  In the option of the seller "carrying back a second 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 borrow the remaining amount from the seller. Typically, this form of second mortgage will have a higher rate of interest.

No matter how you gather down payment funds, the thrill of owning your own home will be just as sweet!

Want to discuss down payment options? Give us a call at 4357556622.