Putting Together Your Down Payment

Many borrowers can easily qualify for various loan programs, but they can't afford a large down payment. Here are a few ways to put together your down payment

Tighten your belt and save. Be on the look-out for ways you can reduce your expenditures to put away money for a down payment. Also, you can look into bank programs in which a specific portion of your take-home pay is automatically deposited into a savings account every pay period. You might look into some big expenses in your spending history that you can do without, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or stay close to home for your family vacation.

Work more and sell items you don't need. Maybe you can get a second job and save your earnings. You can also get creative about the items you can put up for sale. Maybe you own collectibles you can sell at an auction website, or quality household items for a tag or garage sale. You can also look into what your investments will bring if sold.

Tap into your retirement funds. Research the details of your individual plan. Some people get down payment money from withdrawing funds from their IRAs or borrowing from their 401(k) plans. Be sure you comprehend the tax ramifications, repayment terms, and any penalties for withdrawing early.

Ask for assistance from generous family members. First-time buyers somtimes receive help with their down payment assistance from gracious parents and other family members who may be willing 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.

Contact housing finance agencies. These agencies offer special mortgate loan programs- for moderate and low income buyers, buyers interested in sprucing up a residence within a particular area, and other groups as specified by each finance agency. Financing with a housing finance agency, you may receive an interest rate that is below market, down payment help and other perks. Housing finance agencies may help you with a lower interest rate, get you your down payment, and offer other advantages. These non-profit agencies to boost home ownership in particular neighborhoods.

Find out about low-down and no-down mortgage loans.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low to moderate-income buyers qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in qualifying for home financing. FHA provides mortgage insurance to private lenders, making the buyers eligible for a home loan. Interest rates for an FHA mortgage are generally the going interest rate, but the down payment amounts with an FHA loan are less than those of conventional loans. Closing costs may be covered by the mortgage, and your down payment can be as low as 3% of the total amount.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan requires no down payment, has reduced closing costs, and provides the benefit of a competitive interest rate. While the VA doesn't finance the mortgage loans, it does certify eligibility to apply for a VA mortgage.

• Piggy-back loans

  You can finance a down payment through a second mortgage that closes along with the first. Generally the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, rather than putting the usual 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller agrees to loan you part of his own equity to help you get your down payment money. In this scenario, you would finance the majority of the purchase price with a traditional lender and finance the remaining amount with the seller. Usually you will pay a somewhat higher interest rate on the loan financed by the seller.

No matter your strategy of getting together down payment funds, the satisfaction of living in your own home will be just as great!

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