Building Your Down Payment

Lots of folks who are looking to purchase a new home qualify for several different kinds of mortgages, but they can't afford a large down payment. Below are a few methods that will help you put together your down payment

Tighten your belt and save. Look for ways you can trim your expenses to set aside money for a down payment. Also, you can look into bank programs through which some of your paycheck is automatically deposited into a savings account every pay period. Some effective strategies to put together funds include moving into a residence that is less expensive, and skipping your vacation for a year or two.

Sell items you don't really need and find a part-time job. Perhaps you can find a second job and save your earnings. You can also get creative about the items you may be able to sell. You may have collectibles you can put up for sale at an online auction, or household goods for a garage or tag sale. Also, you can look into selling any investments you own.

Borrow your down payment from a retirement plan. Explore the details for your particular plan. Some people get down payment money from withdrawing funds from Individual Retirement Accounts or taking money out of 401(k) programs. Make sure to learn about the tax ramifications, repayment terms, and possible early withdrawal penalties.

Ask for assistance from family members. First-time buyers are often fortunate enough to receive help with their down payment assistance from thoughtful parents and other family members who may be willing to help get them in their own home. Your family members may be happy at the chance to help you reach the goal of buying your own home.

Learn about housing finance agencies. Special mortgate loan programs are extended to buyers in certain situations, such as low income buyers or buyers looking to remodel houses in a particular part of town, among others. Working through this type of agency, you can get a below market interest rate, down payment help and other advantages. These kinds of agencies may assist you with a lower rate of interest, help with your down payment, and offer other benefits. The principal purpose of not-for-profit housing finance agencies is promoting the purchase of homes in particular parts of the city.

Explore no-down and low-down mortgage loan programs.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a critical role in helping low to moderate-income Americans qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, enabling homebuyers who will not qualify for a typical loan, to get financing. Interest rates for an FHA mortgage normally feature the market interest rate, while the down payment amounts for an FHA mortgage will be below those of conventional loans. Closing costs may be included in the mortgage, and your down payment could be as low as 3 percent of the purchase price.

• VA mortgages

  VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can get a VA loan, which usually offers a competitive fixed interest rate, no down payment, and minimal closing costs. While it's true that the mortgages are not actually financed by the VA, the office certifies applicants by providing eligibility certificates.

• Piggy-back loans

  You can 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 home's price, while the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to lend you part of his home equity to help you get your down payment funds. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a slightly higher interest rate on the loan financed by the seller.

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

Need to talk about down payment options? Give us a call: 4357556622.