Building Your Down Payment

Lots of people who are looking to buy a new home qualify for various loan programs, but they don't have a lot of money to put up the standard down payment. Below are a few methods that will help you get together a down payment

Tighten your belt and save. Look for ways to reduce your monthly 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 placed into a savings account each pay period. You might look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay close to home for your family vacation.

Sell items you don't really need and get a second job. Maybe you can get a second job and save your earnings. In addition, you can put together a comprehensive list of items you may be able to sell. Broken gold jewelry can be sold at local jewelry stores. Maybe you own desirable items you can sell at an online auction, or household goods for a tag or garage sale. You could also research what any investments you have could sell for.

Tap into your retirement funds. Check the parameters of your retirement program. It is possible to pull out money from a 401(k) for you down payment or perform a withdrawal from an IRA. Be sure you are knowledgable about any penalties, the way this will affect on taxes, and repayment obligation.

Ask for help from members of your family. First-time buyers are often fortunate enough to get down payment assistance from thoughtful parents and other family members who may be prepared to help get them in their own home. Your family members may be pleased to help you reach the milestone of owning your first home.

Research housing finance agencies. Provisional mortgate loan programs are provided to buyers in specific circumstances, such as low income buyers or buyers planning to renovating homes in a specific area, among others. With the help of this kind of agency, you can be given a below market interest rate, down payment help and other perks. These kinds of agencies can assist you with a lower rate of interest, get you your down payment, and provide other benefits. The main goal of not-for-profit housing finance agencies is promoting the purchase of homes in particular parts of the city.

Research no-down and low-down mortgages.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a critical part in helping low to moderate-income buyers get mortgages. Part 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, enabling buyers who might not be eligible for a traditional mortgage loan, to obtain home financing. Interest rates for an FHA mortgage are generally the current interest rate, but the down payment requirements for an FHA mortgage will be less than those of conventional loans. The required down payment may go as low as 3 percent while the closing costs could be included in the mortgage loan.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan does not require a down payment, has mimimal closing costs, and provides a competitive rate of interest. Although the VA doesn't actually finance the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close with the first. Usually the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. Rather than the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to loan you a portion of his own equity to help you get your down payment funds. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Usually this kind of second mortgage has higher interest.

Want to discuss your down payment? Give us a call: 9043423622.