Putting Together Your Down Payment

Lots of folks who would like to buy a new home qualify for several different kinds of mortgages, but they don't have much to put up the standard down payment. Here are a few straightforward methods that will help you get together your down payment

Slash your budget and build up savings. Turn your budget upside-down to find ways you can cut expenses to go toward your down payment. There are bank programs through which a portion of your take-home pay is automatically deposited into a savings account each pay period. You might look into some big expenses in your spending history that you can live without, or reduce, at least temporarily. For example, you may decide to move into less expensive housing, or stay local for your vacation.

Work more and sell items you do not 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 creative about the things you migh be able to put up for sale. Multiple small things may add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you hold.

Borrow money from your retirement plan. Explore the details of your individual plan. You may take out money from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Be sure you are clear about any penalties, the way this may affect on your income taxes, and repayment terms.

Ask for a gift from family. First-time homebuyers somtimes receive down payment help from thoughtful parents and other family members who are prepared to help get them in their first home. Your family members may be happy at the chance to help you reach the milestone of buying your first home.

Learn about housing finance agencies. Provisional mortgate loan programs are extended to buyers in certain situations, like low income buyers or people planning to renovating homes in a targeted part of town, among others. With the help of this type of agency, you may receive a below market interest rate, down payment help and other benefits. These types of agencies may help you with a reduced interest rate, get you your down payment, and provide other benefits. These non-profit agencies exist to promote home ownership in specific places.

Research no-down and low-down mortgages.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in assisting low and moderate-income Americans qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, enabling new homebuyers who may not qualify for a conventional mortgage, to receive a mortgage. Interest rates with an FHA mortgage usually feature the current interest rate, while the down payment for an FHA loan will be smaller than those of conventional loans. Closing costs may be covered by the mortgage, while the down payment could be as low as 3 percent of the purchase price.

• VA loans

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a competitive rate of interest, no down payment, and minimal closing costs. While the loans don't originate from the VA, the department certifies applicants by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close with the first. Often the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. The borrower covers the remaining 10%, rather than come up with 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 finance the majority of the purchase price with a traditional lending institution and finance the remainder with the seller. Usually you'll pay a somewhat higher interest rate with the loan from the seller.

Want to discuss down payment options? Give us a call at 2037296681.