Putting Together Your Down Payment

Lots of borrowers qualify for a loan, but they can't afford a large down payment. Do you want to buy a new home, but aren't sure how you should get together a down payment?

Cut expenses and save. Scrutinize the budget to find extra money to save for your down payment. You also could enroll in an automatic savings plan to automatically have a set portion of your take-home pay moved into savings. Some effective ways to save additional funds include moving into less expensive housing, and skipping your vacation for a year or two.

Sell items you do not need and find a second job. Maybe you can find a second job to get your down payment money. In addition, you can put together a comprehensive inventory of items you may be able to sell. Unused gold jewelry can bring a good price from local jewelers. A closetful of small things could add up to a nice sum at a garage or tag sale. You can also explore what your investments may bring if sold.

Borrow your down payment from your retirement plan. Investigate the parameters of your specific program. You may borrow money from a 401(k) for you down payment or withdraw from an IRA. Be sure you are clear about any penalties, the effect this will have on income taxes, and repayment obligation.

Ask for a generous gift from your family. First-time homebuyers somtimes receive down payment help from giving family members who are prepared to help them get into their own home. Your family members may be willing to help you reach the goal of owning your own home.

Learn about housing finance agencies. Special loan programs are extended to homebuyers in certain circumstances, like low income buyers or future homeowners looking to renovating houses in a certain place, among others. With the help of this type of agency, you probably will get an interest rate that is below market, down payment help and other advantages. These types of agencies can assist eligible buyers with a lower rate of interest, help with your down payment, and offer other benefits. These non-profit agencies to boost the value of homes in certain places.

Explore no-down and low-down mortgage loan programs.

  • Federal Housing Administration (FHA) mortgages

    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 get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who may not be eligible for a conventional loan by themselves, by offering mortgage insurance to lenders. Interest rates with an FHA mortgage are normally the market interest rate, while the down payment for an FHA mortgage will be lower than those of conventional loans. The required down payment can be as low as 3 percent and the closing costs might be financed in the mortgage.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This particular loan does not require a down payment, has limited closing costs, and offers a competitive rate of interest. Although the mortgages don't originate from the VA, the office verfifies borrowers by providing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close along with the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, rather than having to pull together the usual 20% down payment.

  • Carry-Back loans

    We a seller carries back a second mortgage, the seller loans you part of his or her home equity. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Typically you will pay a somewhat higher interest rate on the loan financed by the seller.

No matter how you gather down payment funds, the satisfaction of owning your own home will be just as sweet!

Need to talk about your down payment? Give us a call: 8888107112.

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