Building Your Down Payment

Many buyers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Here are a few ways to put together your down payment

Slash the budget and build up savings. Be on the look-out for ways you can reduce your expenditures to put away money for a down payment. There are bank programs through which some of your paycheck is automatically placed into savings each pay period. You might look into some big expenses in your spending history that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a family vacation.

Work more and sell items you don't need. Perhaps you can get an additional 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 be sold at local jewelers. Multiple small things could add up to a fair amount at a garage or tag sale. Also, you might want to consider selling any investments you hold.

Tap into your retirement funds. Investigate the parameters of your specific plan. Some homebuyers get down payment money by withdrawing funds from Individual Retirement Accounts or borrowing from their 401(k) programs. You will want to be sure you are clear about any penalties, the way this could affect on income taxes, and repayment obligation.

Ask for assistance from family members. Many buyers somtimes receive help with their down payment assistance from thoughtful family members who may be willing to help get them in their first home. Your family members may be willing to help you reach the goal of buying your first home.

Research housing finance agencies. Special mortgage programs are given to buyers in certain situations, such as low income homebuyers or buyers planning to remodel houses in a certain part of town, among others. Financing with a housing finance agency, you can be given an interest rate that is below market, down payment help and other benefits. These types of agencies can help you with a reduced rate of interest, help with your down payment, and provide other assistance. These non-profit programs exist to promote community in specific neighborhoods.

Find out about low-down and no-down mortgages.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in assisting low and moderate-income individuals get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, enabling new homebuyers who will not qualify for a conventional mortgage loan, to receive home financing. Down payment requirements for FHA mortgages are less than those of traditional mortgages, even though these mortgages have average interest rates. Closing costs can be included in the mortgage, while your down payment could be as low as 3% of the total.

• VA mortgage loans

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan requires no down payment, has limited closing costs, and provides the advantage of a competitive interest rate. While it's true that the mortgage loans don't originate from the VA, the department certifies applicants by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close along with the first. Generally the piggyback loan is for 10 percent of the purchase price, and the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, rather than putting the typical 20% down payment.

• Carry-Back loans

  In the case of a seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. The buyer finances the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Often, this form of second mortgage will have a higher rate of interest.

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

Need to talk about down payment options? Call us at 3032282254.