Building Your Down Payment

Lots of borrowers can qualify for various loan programs, but they don't have a lot of money to put up a down payment. Below are a few ways to get together a down payment

Slash the budget and build up savings. Turn your budget inside out to discover extra money to go toward your down payment. Also, you can look into bank programs through which a specific portion of your paycheck is automatically deposited into savings each 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 may decide to move into less expensive housing, or skip a family vacation.

Work a second job and sell items you don't need. Maybe you can get an additional job and save your earnings. You can also get serious about the possessions you really need and the things you may be able to put up for sale. Maybe you have collectibles you can sell on an online auction, or quality household items for a garage or tag sale. Also, you might want to look into selling any investments you hold.

Tap into retirement funds. Research the details of your particular plan. Some people get down payment money by withdrawing funds from their Individual Retirement Accounts or getting money out of their 401(k) programs. Be sure to find out about the tax ramifications, your obligation for repayment, and any early withdrawal penalties.

Ask for assistance from family members. Many buyers are often lucky enough to receive down payment assistance from thoughtful family members who are anxious to help them get into their own home. Your family members may be inclined to help you reach the goal of owning your own home.

Contact housing finance agencies. Special mortgage programs are provided to homebuyers in specific circumstances, like low income purchasers or homebuyers planning to improve homes in a targeted area, among others. Working through a housing finance agency, you probably will be given an interest rate that is below market, down payment help and other benefits. Housing finance agencies may assist eligible buyers with a lower interest rate, get you your down payment, and offer other assistance. The main goal of not-for-profit housing finance agencies is to boost the purchase of homes in particular areas.

Learn about low-down and no-down mortgage loans.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low to moderate-income families qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, enabling new homebuyers who may not qualify for a conventional mortgage, to receive a mortgage. Interest rates for an FHA loan typically feature the going interest rate, while the down payment requirements for an FHA loan will be below those of conventional loans. Closing costs can be financed in the mortgage, while your down payment could be as low as 3% of the total.

• VA mortgage loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a low fixed rate of interest, no down payment, and minimal closing costs. Although the mortgages aren't actually provided by the VA, the department certifies applicants by issuing eligibility certificates.

• Piggy-back loans

  You can finance a down payment through a second mortgage that closes along with the first. In most cases the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. In contrast to the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  In the option of the seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically you'll pay a somewhat higher interest rate with the loan financed by the seller.

No matter your method of getting together your down payment, the satisfaction of reaching the goal of owning your own home will be just as great!

Want to discuss down payments? Call us at 2037296681.