Building Your Down Payment

Lots of people who are looking to buy a new home qualify for several different kinds of mortgages, but they can't afford a large down payment. Below are a few straightforward ways to get together your down payment

Reduce expenses and save. Turn your budget inside out to uncover extra money to save for your down payment. There are bank programs through which some of your paycheck is automatically placed into a savings account each pay period. Some practical strategies to build up funds include moving into less expensive housing, and skipping your family vacation for a year or two.

Sell things you don't need and find a part-time job. Maybe you can get an additional job and save your earnings. In addition, you can put together a comprehensive inventory of things you may be able to sell. Unworn gold jewelry can bring a good price from local jewelers. Multiple small things could add up to a nice sum at a garage or tag sale. Also, you can think about selling any investments you hold.

Tap into retirement funds. Investigate the parameters of your particular program. You may pull out money from a 401(k) plan for you down payment or perform a withdrawal from an IRA. Make sure you understand about any penalties, the effect this could have on your income taxes, and repayment obligation.

Ask for help from family members. Many buyers somtimes get help with their down payment assistance from caring parents and other family members who may be willing to help them get into their own home. Your family members may be willing to help you reach the goal of buying your first home.

Contact housing finance agencies. Special mortgage programs are offered to homebuyers in specific situations, like low income purchasers or future homeowners looking to improve homes in a particular neighborhood, among others. With the help of this type of agency, you probably will be given an interest rate that is below market, down payment help and other perks. Housing finance agencies may help eligible homebuyers with a reduced rate of interest, help with your down payment, and provide other advantages. The principal mission of non-profit housing finance agencies is promoting the purchase of homes in particular places.

Explore no-down and low-down mortgages.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in helping low to moderate-income Americans qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in qualifying for home financing. FHA offers mortgage insurance to the private lenders, enabling buyers who may not qualify for a typical loan, to obtain financing. Down payment requirements for FHA loans are lower than those with conventional mortgage loans, although these loans have current interest rates. Closing costs can be covered by the mortgage, and your down payment could be as low as 3% of the total.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This special loan requires no down payment, has mimimal closing costs, and offers a competitive interest rate. While the VA doesn't actually issue the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  You may finance your down payment using a second mortgage that closes along with the first. Most of the time, the piggyback loan is for 10 percent of the purchase price, while the first mortgage covers 80 percent. In contrast to the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to loan you some of his home equity to assist you with your down payment money. In this scenario, you would borrow the majority of the purchase price from a traditional lending institution and borrow the remainder from the seller. Typically you will pay a slightly higher rate with the loan from the seller.

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

Want to discuss the best options for down payments? Call us at 4357556622.