Putting Together Your Down Payment

Many buyers can qualify for various loan programs, but they don't have much to put up a down payment. Here are a few ways to get together your down payment

Reduce expenses and save. Scrutinize the budget to discover extra money to save for your down payment. Also, you can look into bank programs through which some of your paycheck is automatically placed into a savings account every pay period. You could look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you might move into less expensive housing, or stay close to home for your family vacation.

Sell items you do not need and find a part-time job. Look for an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get creative about the things you can put up for sale. You may have collectibles you can put up for sale at an online auction, or household goods for a tag or garage sale. Also, you might want to look into selling any investments you hold.

Borrow from your retirement funds. Explore the details of your particular plan. It is possible to pull out money from a 401(k) plan for a down payment or get a withdrawal from an IRA. Be sure you understand the tax ramifications, your obligation for repaying the money, and any penalties for withdrawing early.

Ask for help from generous members of your family. Many homebuyers are often fortunate enough to receive down payment help from thoughtful parents and other family members who are able to help get them in their own home. Your family members may be eager to help you reach the goal of owning your own home.

Research housing finance agencies. Special loan programs are given to buyers in certain situations, like low income homebuyers or buyers looking to renovating houses in a targeted neighborhood, among others. Working through a housing finance agency, you can receive a below market interest rate, down payment help and other incentives. Housing finance agencies may assist eligible homebuyers with a reduced interest rate, get you your down payment, and provide other assistance. The central mission of not-for-profit housing finance agencies is to promote the purchase of homes in specific places.

Find out about low-down and no-down mortgage loan programs.

• FHA loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in helping low to moderate-income families qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a mortgage loan. Down payment sums for FHA loans are smaller than those with typical mortgages, even though these loans hold current interest rates. Closing costs can be included in the mortgage, and your down payment might be as low as 3% of the total.

• VA loans

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which generally offers a competitive rate of interest, no down payment, and minimal closing costs. Although 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 at the same time as the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. 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 loan you some 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 lending institution and finance the remaining amount with the seller. Typically you will pay a somewhat higher interest rate on the loan from the seller.

No matter your strategy of putting together down payment funds, the thrill of reaching the goal of living in your own home will be just as sweet!

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