Putting Together Your Down Payment

Many buyers qualify for various loan programs, but they don't have a lot of cash to pay a down payment. Do you want to buy a new home, but don't know how to get together a down payment?

Slash the budget and build up savings. Be on the look-out for ways you can reduce your monthly expenses to put away money for a down payment. Also, you can look into bank programs in which some of your paycheck is automatically placed into a savings account every pay period. Some effective methods to build up funds include moving into a residence that is less expensive, and staying home for your vacation this year.

Work a second job and sell items you don't need. Perhaps you can find an additional job and build up your earnings. Additionally, you can make a comprehensive list of things you may be able to sell. Broken gold jewelry can bring a good amount from local jewelry stores. Maybe you own desirable items you can sell on an online auction, or household items for a garage or tag sale. Also, you might want to consider selling any investments you hold.

Tap into retirement funds. Explore the details of your particular plan. Many homebuyers get down payment money from withdrawing from their Individual Retirement Accounts or pulling funds out of 401(k) plans. Be sure you understand the tax consequences, your obligation for repaying the money, and any penalties for withdrawing early.

Ask for assistance from generous members of your family. First-time homebuyers somtimes receive down payment assistance from giving family members who may be anxious to help get them in their own home. Your family members may be inclined to help you reach the goal of owning your first home.

Research housing finance agencies. These types of agencies provide special loan programs for low and moderate-income homebuyers, buyers with an interest in renovating a residence within a targeted part of the city, and other groups as specified by the agency. With the help of a housing finance agency, you probably will be given a below market interest rate, down payment assistance and other advantages. These types of agencies can assist eligible buyers with a reduced interest rate, get you your down payment, and offer other assistance. The primary goal of non-profit housing finance agencies is build up residential ownership in particular places.

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 an important role in assisting low and moderate-income families qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to get home financing. FHA offers mortgage insurance to private lenders, enabling new homebuyers who might not qualify for a conventional loan, to obtain a mortgage. Interest rates with an FHA mortgage are usually the going interest rate, while the down payment for an FHA loan are less than those of conventional loans. The required down payment can go as low as three percent and the closing costs might be covered by the mortgage loan.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This special loan does not require a down payment, has mimimal closing costs, and offers a competitive interest rate. While the mortgage loans don't originate from the VA, the department verfifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. Usually the piggyback loan takes care of 10 percent of the home's price, and the first mortgage finances 80 percent. Instead of the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" situation, the seller commits to loan you some of his own equity to help you get your down payment money. In this scenario, you would finance the largest portion of the purchase price with a traditional lender and finance the remainder with the seller. Generally, this form of second mortgage will have higher interest.

No matter how you gather down payment money, the satisfaction of reaching the goal of living in your own home will be just as great!

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