Your Down Payment

Lots of people who are looking to buy a new house can qualify for various loan programs, but they can't afford a large down payment. Here's where to get started

Slash your budget and build up savings. Turn your budget inside out to find extra money to save for your down payment. You also could enroll in an automatic savings plan at your bank to have a portion of your payroll automatically transferred into your savings account. Some effective ways to put together funds include moving into less expensive housing, and staying local for your vacation for a year or two.

Work a second job and sell items you do not need. Maybe you can find an additional job to get your down payment money. You can also get creative about the items you can sell. A closetful of small items could add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you hold.

Borrow from a retirement plan. Check the provisions of your particular program. Many people get down payment money by withdrawing what they need from their IRAs or getting money out of their 401(k) programs. Make sure to ask your plan representative about the tax ramifications, your obligation for repayment, and early withdrawal penalties.

Ask for assistance from family members. Many homebuyers are sometimes fortunate enough to get help with their down payment assistance from caring family members who may be anxious to help them get into their first home. Your family members may be eager to help you reach the milestone of owning your first home.

Research housing finance agencies. These types of agencies offer provisional loan programs to low and moderate-income homebuyers, buyers interested in remodeling a house within a targeted area, and other specific types of buyers as specified by each agency. Financing through this kind of agency, you probably will be given an interest rate that is below market, down payment assistance and other advantages. These kinds of agencies may assist you with a reduced rate of interest, help with your down payment, and provide other advantages. The main purpose of non-profit housing finance agencies is to boost home ownership in targeted places.

Explore no-down and low-down mortgages.

• Federal Housing Administration (FHA) mortgage 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 helping low to moderate-income families get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time buyers and others who might not be able to qualify for a typical loan by themselves, by offering mortgage insurance to private lenders. Interest rates for an FHA mortgage usually feature the market interest rate, but the down payment requirements for an FHA mortgage will be lower than those of conventional loans. The required down payment can go as low as 3 percent and the closing costs might be covered by the mortgage loan.

• VA loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can get a VA loan, which generally offers a competitive fixed interest rate, no down payment, and reduced closing costs. While it's true that the loans don't originate from the VA, the department certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes along with the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, instead of having to put together the typical 20% down payment.

• Carry-Back loans

  We a seller carries back a second mortgage, the seller loans you part of his or her equity. You would borrow the majority of the purchase price from a traditional mortgage lender and borrow the remainder from the seller. Typically you will pay a somewhat higher rate with the loan financed by the seller.

The feeling of accomplishment will be the same, no matter which strategy you use to pull together your down payment. Your brand new home will be worth it!

Want to discuss down payments? Call us at 4357556622.