Your Down Payment

Lots of people who are looking to buy a new house can qualify for various loan programs, but they can't afford a large down payment. Here are a few ways to get together a down payment

Slash your budget and build up savings. Look for ways to trim your expenses to put away money for a down payment. Also, you can look into bank programs in which some of your take-home pay is automatically transferred into a savings account each pay period. You would be wise to look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or stay close to home for your family vacation.

Sell items you do not need and find a second job. Maybe you can find an additional job to get your down payment money. You can also get creative about the items you can sell. You may own desirable items you can sell on an online auction, or quality household goods for a tag or garage sale. Also, you can look into selling any investments you hold.

Borrow your down payment from a retirement plan. Investigate the parameters of your specific plan. You may take out funds from a 401(k) plan for a down payment or perform a withdrawal from an Individual Retirement Account. Make sure to find out about the tax ramifications, your obligation for repayment, and early withdrawal penalties.

Ask for assistance from generous members of your family. First-time buyers somtimes get down payment assistance from thoughtful parents and other family members who may be eager to help get them in their first home. Your family members may be pleased to help you reach the goal of having your first home.

Learn about housing finance agencies. Provisional loan programs are extended to homebuyers in specific circumstances, like low income purchasers or homebuyers looking to remodel homes in a particular place, among others. Working through a housing finance agency, you probably will get an interest rate that is below market, down payment assistance and other perks. Housing finance agencies may help eligible buyers with a lower rate of interest, help with your down payment, and offer other benefits. These non-profit agencies were formed to build up home ownership in specific areas.

Research no-down and low-down mortgages.

• FHA loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income Americans get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who might not be able to qualify for a traditional loan by themselves, by offering mortgage insurance to lenders. Down payment totals for FHA mortgages are below those with traditional mortgage loans, even though these mortgages come with average rates of interest. The required down payment may go as low as three percent while the closing costs might be covered by the mortgage.

• VA mortgages

  VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which typically offers a competitive fixed rate of interest, no down payment, and reduced closing costs. Even though the VA does not finance the mortgages, it does issue a certificate of eligibility to qualify for a VA mortgage.

• Piggy-back loans

  You can fund your down payment with a second mortgage that closes with the first. Usually the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, instead of having to pull together the typical 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to loan you a portion of his home equity to assist you with your down payment money. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Usually you will pay a slightly higher rate with the loan from the seller.

Want to discuss down payment options? Call us at 2037296681.