Your Down Payment

Lots of buyers qualify for a mortgage loan, but they can't afford a large down payment. Below are a few ways to get together a down payment

Tighten your belt and save. Scrutinize the budget to find extra money to go toward your down payment. You could also decide to enroll in an automatic savings plan to have a percentage of your pay automatically moved into a savings account. You could look into some big expenses in your budget that you can do without, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a vacation.

Sell items you do not really need and get a second job. Maybe you can find an additional job and save your earnings. In addition, you can make a comprehensive inventory of things you may be able to sell. Unused gold jewelry can be sold at local jewelry stores. Multiple small things can add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you own.

Borrow from a retirement plan. Explore the specifics for your particular plan. It is possible to borrow funds from a 401(k) plan for a down payment or withdraw from an IRA. Make sure you understand the tax ramifications, repayment terms, and any penalties for withdrawing early.

Request a gift from family. Many buyers somtimes get down payment help from thoughtful parents and other family members who may be eager to help get them in their first home. Your family members may be eager to help you reach the goal of buying your own home.

Contact housing finance agencies. These agencies extend provisional mortgage programs to moderate and low income borrowers, buyers interested in rehabilitating a house within a targeted area, and other specific types of buyers as defined by each agency. Working with a housing finance agency, you may be given a below market interest rate, down payment assistance and other benefits. Housing finance agencies can help eligible buyers with a lower rate of interest, help with your down payment, and offer other assistance. The principal mission of not-for-profit housing finance agencies is build up residence ownership in particular places.

Research no-down and low-down mortgage loans.

• FHA mortgage loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in assisting low to moderate-income families get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to get mortgage loans. FHA offers mortgage insurance to private lenders, helping the buyers to become eligible for a loan. Down payment sums for FHA mortgages are less than those with traditional mortgage loans, even though these mortgages hold average rates of interest. The down payment may go as low as 3 percent and the closing costs may be financed in the mortgage loan.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This specialized loan does not require a down payment, has limited closing costs, and offers a competitive rate of interest. Although the VA doesn't actually finance the mortgage loans, it does certify eligibility to apply for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Generally the piggyback loan takes care of 10 percent of the home's price, while the first mortgage finances 80 percent. In contrast to the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" situation, the seller commits to loan you a portion of his home equity to assist you with your down payment funds. In this scenario, you would finance the largest portion of the purchase price with a traditional lender and finance the remainder with the seller. Usually you will pay a slightly higher interest rate with the loan financed by the seller.

Need to talk about your down payment? Give us a call at 7068605514.