Putting Together Your Down Payment

Lots of buyers qualify for various loan programs, but they don't have a lot of cash to pay the standard down payment. Want to buy a new home, but don't know how you should put together your down payment?

Reduce expenses and save. Scrutinize your budget to find extra money to go toward your down payment. There are bank programs through which some of your take-home pay is automatically transferred into savings each pay period. Some effective methods to put together funds include moving into less expensive housing, and staying home for your family vacation this year.

Work a second job and sell items you don't need. Maybe you can get a second job to get your down payment money. In addition, you can put together an exhaustive list of things you may be able to sell. Unworn gold jewelry can bring a good amount from local jewelers. A closetful of small items can add up to a nice sum at a garage or tag sale. You might also look into what any investments you own will sell for.

Borrow from your retirement plan. Research the specifics for your particular plan. You may pull out funds from a 401(k) plan for you down payment or make a withdrawal from an Individual Retirement Account. Be sure to learn about the tax ramifications, your obligation for repaying funds, and any penalties for withdrawing early.

Ask for assistance from generous members of your family. First-time homebuyers somtimes receive down payment assistance from gracious parents and other family members who are eager to help them get into their own home. Your family members may be inclined to help you reach the goal of buying your first home.

Learn about housing finance agencies. Provisional mortgage loans are provided to buyers in certain circumstances, such as low income purchasers or buyers planning to renovating homes in a certain neighborhood, among others. With the help of a housing finance agency, you can get an interest rate that is below market, down payment help and other benefits. These types of agencies can help eligible homebuyers with a reduced interest rate, get you your down payment, and provide other advantages. These non-profit agencies exist to boost the value of homes in specific neighborhoods.

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

• FHA loans

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in assisting 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) helps individuals get FHA provides mortgage insurance to private lenders, making the buyers eligible for a mortgage loan. Interest rates for an FHA loan generally feature the market interest rate, while the down payment requirements for an FHA mortgage will be less than those of conventional loans. Closing costs can be included in the mortgage, and your down payment might be as low as 3 percent of the purchase price.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan does not require a down payment, has limited closing costs, and offers a competitive interest rate. While it's true that the mortgage loans don't originate from the VA, the department certifies applicants by issuing eligibility certificates.

• Piggy-back loans

  You can fund your down payment through a second mortgage that closes along with the first. Generally the piggyback loan takes care of 10 percent of the purchase amount, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, instead of come up with the typical 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller commits to loan you a piece of his home equity to help you get your down payment money. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Generally, this kind of second mortgage has a higher rate of interest.

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

Want to discuss your down payment? Give us a call: 4357556622.