Building Your Down Payment

Many folks who would like to purchase a new house qualify for several different kinds of mortgages, but they don't have a large sum of cash to put up a down payment. Below are a few methods that will help you get together a down payment

Cut expenses and save. Scrutinize your budget to find extra money to go toward your down payment. There are bank programs in which a portion of your take-home pay is automatically placed into a savings account every pay period. You might look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay close to home for your family vacation.

Work more and sell things you don't need. Maybe you can get a second job and save your earnings. In addition, you can make a comprehensive inventory of items you can sell. Broken gold jewelry can bring a good amount from local jewelry stores. You may have collectibles you can sell at an online auction, or quality household goods for a tag or garage sale. You could also explore what your investments could bring if sold.

Tap into retirement funds. Explore the specifics for your individual plan. Some people get down payment money by withdrawing funds from IRAs or taking money out of 401(k) plans. Be sure you understand about any penalties, the effect this will have on income taxes, and repayment obligation.

Ask for help from family members. First-time homebuyers are sometimes fortunate enough to get down payment assistance from thoughtful parents and other family members who are willing to help them get into their first home. Your family members may be happy at the chance to help you reach the goal of buying your first home.

Contact housing finance agencies. These agencies offer provisional mortgate loan programs- for moderate and low income buyers, buyers interested in rehabilitating a home in a specific part of the city, and other groups as specified by each finance agency. Financing with this type of agency, you probably will get an interest rate that is below market, down payment help and other advantages. These kinds of agencies can help eligible buyers with a lower interest rate, help with your down payment, and offer other benefits. The primary purpose of not-for-profit housing finance agencies is boosting residence ownership in specific parts of the city.

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

• FHA mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in assisting low and moderate-income Americans get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time buyers and others who would not be eligible for a traditional mortgage on their own, by providing mortgage insurance to the lenders. Down payment amounts for FHA mortgages are less than those for conventional mortgages, although these mortgages have current interest rates. The required down payment can go as low as 3 percent while the closing costs could be covered by the mortgage loan.

• VA mortgage loans

  With a guarantee from 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 mimimal closing costs, and provides a competitive interest rate. While the VA doesn't issue 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 closes with the first. Most of the time, the piggyback loan is for 10 percent of the purchase amount, while the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, rather than putting the usual 20% down payment.

• Carry-Back loans

  With a carry-back mortgage, the seller loans you part of his or her equity. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically, this type of second mortgage will have higher interest.

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

Want to discuss down payment options? Give us a call at 866-300-1550.