Putting Together Your Down Payment

Lots of people who would like to purchase a new home can qualify for various loan programs, but they can't afford a large down payment. We have a few ideas

Reduce expenses and save. Look for ways to reduce your monthly expenses to put away money for a down payment. You also might enroll in an automatic savings plan to automatically have a set amount from your take-home pay deposited into savings. Some practical ways to save additional funds include moving into less expensive housing, and skipping your vacation for a year or two.

Work a second job and sell items you don't need. Perhaps you can get a second job to get your down payment money. In addition, you can make a comprehensive inventory of items you can sell. Unused gold jewelry can bring a good price from local jewelers. A closetful of small items can add up to a fair amount at a garage or tag sale. You might also look into what any investments you own could bring if sold.

Tap into your retirement funds. Research the specifics of your particular plan. You can borrow funds from a 401(k) for you down payment or withdraw from an IRA. Make sure you understand the tax consequences, your obligation for repayment, and penalties for withdrawing early.

Ask for assistance from generous family members. Many homebuyers somtimes receive down payment help from caring family members who may be able to help get them in their own home. Your family members may be pleased to help you reach the milestone of owning your own home.

Contact housing finance agencies. These types of agencies extend provisional mortgage loans to moderate and low income borrowers, buyers interested in remodeling a residence in a targeted part of the city, and additional specific types of buyers as specified by each finance agency. With the help of a housing finance agency, you can receive an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies can help you with a lower rate of interest, get you your down payment, and offer other benefits. The primary goal of not-for-profit housing finance agencies is boosting home ownership in particular parts of the city.

Research no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low and moderate-income Americans get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in qualifying for home financing. FHA aids first-time homebuyers and others who might not be eligible for a traditional loan on their own, by providing mortgage insurance to the private lenders. Down payment requirements for FHA loans are lower than those of typical mortgage loans, even though these mortgages have current interest rates. The down payment may be as low as 3 percent while the closing costs might be included in the mortgage.

• VA mortgage loans

  With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This particular loan requires no down payment, has mimimal closing costs, and offers a competitive rate of interest. While the VA does not actually provide the loans, it does certify eligibility to apply for a VA loan.

• Piggy-back loans

  You can finance a down payment with a second mortgage that closes along with the first. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than having to pull together the usual 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller agrees to lend you a portion of his own equity to help you get your down payment money. You would finance the majority of the purchase price with a traditional lender and borrow the remainder from the seller. Usually this type of second mortgage will have higher interest.

No matter how you gather your down payment, the thrill of owning your own home will be just as great!

Need to talk about down payment options? Call us at 2037296681.