Putting Together Your Down Payment

Lots of buyers can easily qualify for a mortgage loan, but they don't have a lot of money to pay the standard down payment. Start here

Cut expenses and save. Look for ways you can trim your monthly expenses to save toward a down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a specific portion of your take-home pay transferred into savings. Some practical approaches to save additional funds include moving into less expensive housing, and staying local for your family vacation this year.

Sell things you don't need and get a second job. Perhaps you can find a second job and build up your earnings. In addition, you can put together a comprehensive inventory of items you can sell. Broken gold jewelry can be sold at local jewelers. A closetful of small items can add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Borrow from retirement funds. Research the details for your individual plan. Some people get down payment money by withdrawing from their IRAs or borrowing from 401(k) programs. Be sure to learn about the tax ramifications, repayment terms, and possible early withdrawal penalties.

Ask for help from generous family members. Many buyers somtimes receive down payment assistance from thoughtful family members who are anxious to help get them in their own home. Your family members may be inclined to help you reach the milestone of owning your first home.

Research housing finance agencies. Special mortgage programs are extended to homebuyers in certain situations, such as low income purchasers or buyers looking to remodel houses in a particular part of town, among others. Working through this kind of agency, you can receive an interest rate that is below market, down payment assistance and other benefits. These types of agencies may help eligible buyers with a reduced rate of interest, get you your down payment, and provide other assistance. These non-profit agencies exist to boost community in particular areas.

Research no-down and low-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 part in aiding low to moderate-income individuals qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgage loans. FHA offers mortgage insurance to private lenders, enabling homebuyers who will not qualify for a traditional mortgage, to obtain financing. Down payment requirements for FHA loans are below those for traditional mortgages, although these loans have average rates of interest. The required down payment may be as low as 3 percent while the closing costs might be included in the mortgage loan.

• VA mortgage 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 reduced closing costs, and provides the advantage of a competitive rate of interest. While the mortgages are not actually financed by the VA, the department verfifies applicants by issuing eligibility certificates.

• Piggy-back loans

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

• Carry-Back loans

  In the option of a seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. In this scenario, you would finance the majority of the purchase price with a traditional mortgage lender and borrow the remaining amount from the seller. Often, this kind of second mortgage will have a higher rate of interest.

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

Want to discuss down payments? Give us a call at 9043423622.