Building Your Down Payment

Lots of folks who are looking to purchase a new house can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. We have a few suggestions

Cut expenses and save. Turn your budget upside-down to find extra money to go toward your down payment. There are bank programs in which some of your paycheck is automatically deposited into a savings account each pay period. You might look into some big expenses in your budget that you can live without, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or skip a family vacation.

Sell things you do not need and get a second job. Look for an additional job. This can be rough, but the temporary trial can help you get your down payment. In addition, you can make an exhaustive inventory of items you can sell. Broken gold jewelry can be sold at local jewelry stores. A closetful of small items could add up to a nice sum at a garage or tag sale. You could also research what any investments you have will bring if sold.

Tap into your retirement funds. Check the provisions of your particular plan. Many homebuyers get down payment money from withdrawing what they need from their IRAs or borrowing from their 401(k) programs. Make sure you comprehend the tax ramifications, repayment terms, and early withdrawal penalties.

Request a gift from family. First-time buyers somtimes get help with their down payment assistance from gracious family members who may be anxious to help get them in their first home. Your family members may be eager to help you reach the milestone of owning your own home.

Contact housing finance agencies. These types of agencies offer special mortgage loans for moderate and low income borrowers, buyers interested in sprucing up a house in a targeted area, and other groups as defined by each finance agency. With the help of this type of agency, you may be given an interest rate that is below market, down payment help and other incentives. These kinds of agencies may assist eligible homebuyers with a reduced rate of interest, get you your down payment, and provide other assistance. These non-profit programs exist to boost home ownership in specific places.

Find out about low-down and no-down mortgage loans.

• FHA loans

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in helping low to moderate-income families get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgages. FHA aids first-time buyers and others who might not be eligible for a traditional loan by themselves, by providing mortgage insurance to the lenders. Interest rates with an FHA loan are normally the current interest rate, but the down payment requirements for an FHA mortgage will be lower than those of conventional loans. The down payment may go as low as three percent while the closing costs may be covered by the mortgage.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan requires no down payment, has mimimal closing costs, and provides a competitive interest rate. Even though the VA doesn't actually finance the mortgage loans, it does issue a certificate of eligibility to qualify for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. Often the first mortgage covers 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 pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to loan you some of his own equity to help you get your down payment funds. The buyer finances most of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Typically you will pay a slightly higher interest rate with the loan from the seller.

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

Want to discuss down payment options? Call us at 7184417000.