Putting Together Your Down Payment

Lots of borrowers qualify for various loan programs, but they don't have a lot of money to pay the standard down payment. Do you want to look into getting a new house, but aren't sure how to put together your down payment?

Slash your budget and build up savings. Scrutinize your budget to discover extra money to go toward your down payment. There are bank programs through which some of your take-home pay is automatically transferred into a savings account every pay period. Some effective methods to put together funds include moving into less expensive housing, and staying local for your vacation for a year or two.

Work a second job and sell items you don't need. Maybe you can get a second 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 sell. Multiple small things could add up to a nice sum at a garage or tag sale. You can also explore what any investments you have could sell for.

Borrow from retirement funds. Explore the details for your particular plan. It is possible to borrow money from a 401(k) for a down payment or withdraw from an IRA. Make sure you understand about any penalties, the way this will affect on income taxes, and repayment terms.

Ask for help from family members. Many buyers are sometimes fortunate enough to receive down payment help from caring family members who may be willing to help them get into their own home. Your family members may be pleased at the chance to help you reach the milestone of owning your own home.

Learn about housing finance agencies. These types of agencies offer provisional mortgage programs for moderate and low income borrowers, buyers interested in sprucing up a home in a specific area, and other specific types of buyers as defined by each finance agency. Working through this type of agency, you can receive an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies may assist eligible buyers with a reduced interest rate, get you your down payment, and offer other advantages. These non-profit agencies exist to promote community in specific neighborhoods.

Research no-down and low-down mortgages.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in assisting low to moderate-income individuals qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get mortgage loans. FHA helps first-time buyers and others who might not be eligible for a conventional mortgage by themselves, by providing mortgage insurance to private lenders. Interest rates for an FHA loan usually feature the market interest rate, but the down payment requirements for an FHA loan will be smaller than those of conventional loans. Closing costs may be included in the mortgage, and your down payment may be as low as 3 percent of the total amount.

• VA loans

  VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which generally offers a reasonable fixed rate of interest, no down payment, and reduced closing costs. While the loans are not actually issued by the VA, the office certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes along 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 just has to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to loan you a piece of his own equity to help you get your down payment funds. You would finance the largest portion of the purchase price with a traditional mortgage lender and finance the remaining amount with the seller. Usually this type of second mortgage will have a higher rate of interest.

No matter your strategy of putting together your down payment, the satisfaction of reaching the goal of living in your own home will be just as great!

Need to talk about the best options for down payments? Call us at 7068605514.