Your Down Payment

Many folks who would like to purchase a new home qualify for various loan programs, but they can't afford a large down payment. Here are a few methods that will help you get together a down payment

Tighten your belt and save. Be on the look-out for ways to trim your expenses to put away money for a down payment. There are bank programs through which some of your take-home pay is automatically placed into a savings account every pay period. You could look into some big expenses in your budget that you can do without, or trim, at least temporarily. For example, you may move into less expensive housing, or skip a vacation.

Work a second job and sell items you don't need. Maybe you can find a second job and build up your earnings. You can also get creative about the things you may be able to sell. Maybe you have collectibles you can put up for sale at an online auction, or household items for a tag or garage sale. You can also explore what your investments could sell for.

Borrow your down payment from a retirement plan. Check the provisions of your particular program. You may take out funds from a 401(k) for a down payment or withdraw from an IRA. Be sure to ask your plan representative about the tax consequences, your obligation for repayment, and penalties for withdrawing early.

Ask for assistance from generous members of your family. Many buyers are often lucky enough to get down payment assistance from gracious parents and other family members who are anxious to help them get into their own home. Your family members may be eager to help you reach the goal of having your first home.

Learn about housing finance agencies. These agencies offer provisional mortgage loans to low and moderate-income buyers, buyers interested in sprucing up a residence in a targeted part of the city, and other specific types of buyers as specified by each finance agency. Working with a housing finance agency, you probably will be given an interest rate that is below market, down payment assistance and other perks. These types of agencies may help eligible buyers with a lower rate of interest, get you your down payment, and offer other advantages. These non-profit agencies to promote home ownership in specific places.

Learn about low-down and no-down mortgage loan programs.

• FHA loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in aiding low to moderate-income Americans 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 financing. Down payment requirements for FHA mortgages are smaller than those of conventional mortgage loans, although these loans hold current rates of interest. The required down payment may be as low as 3 percent and the closing costs might be covered by the mortgage loan.

• VA mortgage loans

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a low fixed interest rate, no down payment, and reduced closing costs. Even though the mortgage loans don't originate from the VA, the office certifies applicants by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close with the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage covers 80 percent. The borrower pays the remaining 10%, instead of come up with the typical 20% down payment.

• Carry-Back loans

  With a carry-back mortgage, the seller loans you part of his or her equity. In this scenario, you would borrow the largest portion of the purchase price from a traditional lending institution and borrow the remainder from the seller. Generally, this form of second mortgage will have a higher rate of interest.

Need to talk about your down payment? Give us a call: 9162758775.