Putting Together Your Down Payment

Many borrowers can easily qualify for several different kinds of mortgages, but they don't have a lot of money to pay a down payment. Here are a few tips:

Tighten your belt and save. Turn your budget upside-down to uncover ways you can cut expenses to go toward your down payment. Also, you can look into bank programs in which some of your take-home pay is automatically transferred into a savings account each pay period. Some practical methods to save additional funds include moving into less expensive housing, and skipping a year's vacation.

Work more and sell items you don't need. Look for an additional job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get serious about the possessions you actually need and the things you can sell. A closetful of small things can add up to a fair amount at a garage or tag sale. You could also explore what your investments could bring if sold.

Tap into retirement funds. Check the provisions of your specific program. Many people get down payment money by withdrawing funds from their Individual Retirement Accounts or taking money out of 401(k) plans. Make sure you know about any penalties, the effect this could have on your taxes, and repayment terms.

Request a gift from your family. First-time homebuyers are often fortunate enough to receive down payment assistance from giving parents and other family members who are anxious to help get them in their first home. Your family members may be pleased to help you reach the milestone of buying your own home.

Research housing finance agencies. These agencies extend special mortgate loan programs to moderate and low income buyers, buyers with an interest in rehabilitating a home within a specific part of the city, and other groups as defined by the finance agency. Financing with this kind of agency, you probably will receive a below market interest rate, down payment help and other advantages. These types of agencies may help eligible buyers with a lower interest rate, get you your down payment, and offer other assistance. These non-profit agencies exist to promote the value of homes in particular places.

Explore no-down and low-down mortgages.

• 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 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 buyers and others who would not be eligible for a typical mortgage by themselves, by offering mortgage insurance to the private lenders. Down payment amounts for FHA loans are less than those for traditional mortgages, although these mortgages have average interest rates. The down payment may go as low as three percent and the closing costs can be covered by the mortgage.

• VA mortgage loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which typically offers a low interest rate, no down payment, and minimal closing costs. Even though the VA does not actually issue the mortgages, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes along with the first. In most cases the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. Rather than the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a somewhat higher interest rate on the loan financed by the seller.

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

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