Putting Together Your Down Payment

Lots of buyers qualify for a loan, but they don't have a large sum of cash to put up a down payment. Want to look into getting a new house, but don't know how you should put together your down payment?

Slash your budget and build up savings. Look for ways you can reduce your expenses to put away money for a down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a set amount from your paycheck moved into savings. Some effective approaches to build up funds include moving into less expensive housing, and staying home for your family vacation for a year or two.

Work a second job and sell items you do not need. Look for an additional job. This can be rough, but the temporary trial can help you get your down payment. Additionally, you can make an exhaustive inventory of things you may be able to sell. Unworn gold jewelry can be sold at local jewelers. Multiple small things could add up to a nice sum at a garage or tag sale. Also, you can think about selling any investments you own.

Borrow money from a retirement plan. Check the parameters of your specific plan. Some people get down payment money by withdrawing funds from IRAs or borrowing from 401(k) programs. Be sure to ask your plan representative about the tax ramifications, repayment terms, and possible penalties for withdrawing early.

Ask for assistance from members of your family. First-time buyers somtimes get down payment help from thoughtful parents and other family members who are anxious to help get them in their first home. Your family members may be inclined to help you reach the goal of buying your own home.

Learn about housing finance agencies. Special mortgage loans are provided to homebuyers in certain circumstances, such as low income buyers or buyers planning to renovating houses in a specific neighborhood, among others. With the help of a housing finance agency, you can receive a below market interest rate, down payment help and other incentives. These kinds of agencies may assist you with a lower rate of interest, get you your down payment, and provide other advantages. These non-profit programs exist to build up home ownership in specific areas.

Learn about low-down and no-down mortgages.

• FHA mortgages

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low to moderate-income buyers get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgage loans. FHA helps first-time buyers and others who may not be eligible for a traditional loan by themselves, by providing mortgage insurance to the lenders. Interest rates with an FHA loan are usually the going interest rate, but the down payment amounts with an FHA mortgage are smaller than those of conventional loans. Closing costs may be financed in the mortgage, and the down payment might be as low as 3% of the total.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan does not require a down payment, has limited closing costs, and provides a competitive interest rate. Even though the VA doesn't actually provide the mortgage loans, it does issue a certificate of eligibility to qualify for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. Often the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, rather than needing to put together the usual 20% down payment.

• Carry-Back loans

  With a carry-back mortgage, the you borrow a portion of the seller's home equity.. The buyer funds the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Generally, this form of second mortgage has a higher rate of interest.

Need to talk about the best options for down payments? Give us a call: 866-300-1550.