Building Your Down Payment

Many buyers qualify for a loan, but they don't have a lot of cash to pay a down payment. Here's where to get started

Tighten your belt and save. Look for ways to reduce your expenditures to set aside money for a down payment. You may also decide to enroll in an automatic savings plan at your bank to automatically have a specific amount from your take-home pay deposited into savings. Some effective approaches to build up funds include moving into a residence that is less expensive, and skipping your vacation for a year or two.

Sell items you do not need and find a part-time job. Maybe you can find an additional job to get your down payment money. In addition, you can put together an exhaustive inventory of items you can sell. Unused gold jewelry can bring a good price from local jewelers. You might have collectibles you can sell at an auction website, or household items for a garage or tag sale. Also, you can consider selling any investments you own.

Borrow from your retirement funds. Check the provisions of your retirement program. It is possible to pull out funds from a 401(k) for you down payment or withdraw from an IRA. You will need to be sure you understand about any penalties, the effect this may have on your income taxes, and repayment terms.

Ask for help from members of your family. Many buyers somtimes receive help with their down payment help from gracious family members who are able to help them get into their first home. Your family members may be eager to help you reach the goal of buying your own home.

Learn about housing finance agencies. These types of agencies offer special mortgate loan programs- for moderate and low income buyers, buyers interested in renovating a residence within a particular area, and additional groups as defined by the finance agency. With the help of a housing finance agency, you may be given a below market interest rate, down payment assistance and other incentives. Housing finance agencies can assist eligible homebuyers with a reduced interest rate, get you your down payment, and provide other benefits. These non-profit agencies exist to boost the value of homes in certain areas.

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

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in helping 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) helps individuals get FHA helps first-time homebuyers and others who might not be eligible for a conventional mortgage on their own, by offering mortgage insurance to private lenders. Down payment totals for FHA loans are below those of typical mortgage loans, although these loans come with average rates of interest. Closing costs may be financed in the mortgage, while your down payment may be as low as 3% of the total amount.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This special loan does not require a down payment, has mimimal closing costs, and offers a competitive rate of interest. Even though the loans aren't actually issued by the VA, the department verfifies borrowers by providing eligibility certificates.

• Piggy-back loans

  You can fund a down payment through a second mortgage that closes with the first. In most cases the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. The homebuyer covers the remaining 10%, instead of come up with the usual 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to lend you a portion of his own equity to help you with your down payment funds. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Often, this type of second mortgage will have a higher rate of interest.

No matter your method of pulling together your down payment, the satisfaction of living in your own home will be just as great!

Need to talk about the best options for down payments? Give us a call: 7068605514.