Putting Together Your Down Payment

Many folks who are looking to buy a new home can easily qualify for a mortgage loan, but they can't afford a large down payment. We have a few suggestions

Tighten your belt and save. Be on the look-out for ways you can reduce your expenses to save toward a down payment. You could also try enrolling in an automatic savings plan to automatically have a set portion of your paycheck deposited into your savings account. You might look into some big expenses in your spending history that you can live 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.

Work a second job and sell items you do not need. Try to find an additional job. This can be rough, but the temporary difficulty can provide your down payment money. Additionally, you can make a comprehensive inventory of items you may be able to sell. Broken gold jewelry can bring a good price from local jewelers. Maybe you own collectibles you can put up for sale on an auction website, or household items for a garage or tag sale. You can also look into what any investments you have will bring if sold.

Borrow money from a retirement plan. Research the specifics for your individual plan. It is possible to borrow money from a 401(k) plan for a down payment or get a withdrawal from an Individual Retirement Account. Make sure you comprehend the tax consequences, repayment terms, and possible early withdrawal penalties.

Ask for help from family members. First-time buyers are sometimes fortunate enough to receive help with their down payment assistance from caring parents and other family members who are willing to help them get into their own home. Your family members may be eager to help you reach the goal of owning your first home.

Research housing finance agencies. Special mortgage programs are provided to homebuyers in certain situations, such as low income buyers or people planning to renovating houses in a certain part of town, among others. Working with a housing finance agency, you can receive a below market interest rate, down payment help and other benefits. These kinds of agencies may help you with a reduced interest rate, help with your down payment, and provide other assistance. The main purpose of non-profit housing finance agencies is to boost home ownership in targeted places.

Explore no-down and low-down mortgages.

• FHA mortgage 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 families get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in qualifying for mortgage loans. FHA assists first-time homebuyers and others who might not be able to qualify for a conventional loan by themselves, by providing mortgage insurance to private lenders. Down payment totals for FHA loans are less than those for traditional mortgage loans, although these loans come with current rates of interest. The down payment may be as low as three percent and the closing costs may be covered by the mortgage.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan requires no down payment, has mimimal closing costs, and offers a competitive interest rate. Even though the mortgage loans don't originate from the VA, the office verfifies applicants by providing eligibility certificates.

• Piggy-back loans

  You can finance your down payment through a second mortgage that closes with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's amount, and the first mortgage covers 80 percent. The homebuyer pays the remaining 10%, instead of putting the usual 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to lend you a portion of his own equity to assist you with your down payment money. In this scenario, you would borrow the majority of the purchase price from a traditional lending institution and borrow the remaining amount from the seller. Typically, this type of second mortgage will have higher interest.

No matter your method of pulling together your down payment money, the satisfaction of owning your own home will be just as sweet!

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