Putting Together Your Down Payment

Lots of buyers can easily qualify for various loan programs, but they can't afford a large down payment. Do you want to buy a new home, but don't know how you should put together your down payment?

Tighten your belt and save. Be on the look-out for ways you can trim your expenditures to put away money for a down payment. You also might enroll in an automatic savings plan at your bank to automatically have a specific amount from your paycheck deposited into savings. Some effective strategies to put together funds include moving into less expensive housing, and staying home for your vacation for a year or two.

Work a second job and sell things you do not need. Perhaps you can get a second job and save your earnings. You can also get creative about the items you can put up for sale. A closetful of small items might add up to a fair amount at a garage or tag sale. Also, you might want to consider selling any investments you own.

Tap into retirement funds. Investigate the provisions of your specific program. Many people get down payment money by withdrawing what they need from IRAs or taking funds out of 401(k) programs. You will want to be sure you are knowledgable about any penalties, the effect this will have on your income taxes, and repayment terms.

Ask for assistance from generous family members. First-time homebuyers are sometimes lucky enough to receive down payment assistance from caring parents and other family members who are prepared to help them get into their own home. Your family members may be pleased to help you reach the goal of owning your first home.

Contact housing finance agencies. These types of agencies provide special mortgate loan programs- for low and moderate-income borrowers, buyers interested in remodeling a house in a particular area, and additional groups as defined by the finance agency. Financing through this kind of agency, you can be given an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies can help eligible homebuyers with a reduced interest rate, get you your down payment, and provide other assistance. These non-profit programs exist to promote the value of homes in particular places.

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

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low to moderate-income individuals qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in qualifying for mortgage loans. FHA assists first-time buyers and others who might not be able to qualify for a conventional mortgage by themselves, by providing mortgage insurance to private lenders. Interest rates with an FHA mortgage are typically the current interest rate, while the down payment with an FHA mortgage will be smaller than those of conventional loans. Closing costs can be financed within the mortgage, and your down payment might be as low as 3% of the total.

• VA mortgages

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which generally offers a low rate of interest, no down payment, and reduced closing costs. While it's true that 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 closes with the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, rather than come up with the typical 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to loan you a piece of his own equity to help you get your down payment funds. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lender and finance the remainder with the seller. Generally, this kind of second mortgage will have higher interest.

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