Building Your Down Payment

Many borrowers qualify for a mortgage loan, but they can't afford a large down payment. Want to look into getting a new house, but aren't sure how you should get together a down payment?

Tighten your belt and save. Look for ways you can reduce your expenses to put away money for a down payment. You might also try enrolling in an automatic savings plan to automatically have a set portion of your take-home pay moved into a savings account. Some effective ways to put together funds include moving into less expensive housing, and staying home for your vacation for a year or two.

Sell things you do not really need and get a second job. Maybe you can get an additional job to get your down payment money. You can also seriously consider the possessions you really need and the items you may be able to put up for sale. Maybe you have collectibles you can sell on an online auction, or quality household goods for a tag or garage sale. You could also explore what your investments could bring if sold.

Borrow money from a retirement plan. Investigate the parameters of your retirement program. Many homebuyers get down payment money from withdrawing funds from their Individual Retirement Accounts or borrowing from 401(k) programs. Make sure you understand about any penalties, the effect this may have on your income taxes, and repayment obligation.

Ask for help from generous family members. First-time homebuyers somtimes receive help with their down payment assistance from thoughtful parents and other family members who may be anxious to help them get into their own home. Your family members may be eager to help you reach the milestone of having your first home.

Research housing finance agencies. Special loan programs are provided to buyers in specific situations, like low income homebuyers or buyers looking to remodel houses in a certain neighborhood, among others. With the help of a housing finance agency, you probably will receive an interest rate that is below market, down payment help and other perks. Housing finance agencies can assist you with a lower interest rate, help with your down payment, and offer other benefits. The primary purpose of non-profit housing finance agencies is boosting the purchase of homes in specific areas.

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

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a vital role in helping low and moderate-income buyers get mortgages. 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 private lenders, ensuring the buyers are eligible for a mortgage. Down payment requirements for FHA loans are less than those of traditional mortgage loans, although these loans have average rates of interest. Closing costs can be financed within the mortgage, while your down payment may be as low as 3 percent of the purchase price.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan does not require a down payment, has limited closing costs, and provides the advantage of a competitive interest rate. While the mortgage loans don't originate from the VA, the department verfifies borrowers 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%. Instead of the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  With a carry-back mortgage, the you borrow part of the seller's home equity.. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Often, this kind of second mortgage has higher interest.

No matter your strategy of putting together your down payment, the thrill of owning your own home will be just as sweet!

Want to discuss the best options for down payments? Call us: 9162758775.