Building Your Down Payment

Many buyers qualify for various loan programs, but they can't afford a large down payment. Want to look into getting a new home, but don't know how you should put together your down payment?

Tighten your belt and save. Scrutinize your budget to uncover extra money to save for your down payment. Also, you can look into bank programs in which a specific portion of your take-home pay is automatically placed into savings each pay period. Some effective methods to build up funds include moving into less expensive housing, and skipping your vacation for a year or two.

Work more and sell things you don't need. Try to find a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get creative about the items you can put up for sale. Multiple small items might add up to a nice sum at a garage or tag sale. Also, you can think about selling any investments you own.

Borrow from a retirement plan. Research the details for your particular plan. Many homebuyers get down payment money from withdrawing from their IRAs or pulling funds out of their 401(k) programs. Be sure you understand about any penalties, the way this will affect on your taxes, and repayment obligation.

Ask for help from family members. Many buyers somtimes receive help with their down payment assistance from giving parents and other family members who are eager to help get them in their own home. Your family members may be willing to help you reach the goal of buying your own home.

Research housing finance agencies. These agencies offer provisional mortgage programs to moderate and low income homebuyers, buyers interested in renovating a residence in a specific area, and additional groups as defined by the agency. Financing with this type of agency, you probably will be given an interest rate that is below market, down payment help and other benefits. These kinds of agencies can assist you with a lower rate of interest, help with your down payment, and offer other advantages. These non-profit programs were established to promote the value of homes in specific areas.

Learn about low-down and no-down mortgages.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in assisting low to moderate-income Americans qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who would not be able to qualify for a traditional mortgage loan by themselves, by offering mortgage insurance to the lenders. Down payment totals for FHA loans are smaller than those for conventional mortgage loans, even though these loans hold average interest rates. The required down payment may go as low as three percent and the closing costs can be packaged in the mortgage.

• VA mortgages

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

• Piggy-back loans

  You can fund a down payment with a second mortgage that closes at the same time as the first. In most cases the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than putting the usual 20% down payment.

• Carry-Back loans

  In the case of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically you'll pay a slightly higher interest rate on the loan from the seller.

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

Want to discuss down payments? Call us at 3032282254.