Building Your Down Payment

Many folks who would like to purchase a new home qualify for various loan programs, but they can't afford a large down payment. Want to buy a new house, but don't know how to get together your down payment?

Reduce expenses and save. Look for ways you can trim your expenses to set aside money for a down payment. There are bank programs in which some of your paycheck is automatically deposited into savings every pay period. Some practical strategies to build up funds include moving into housing that is less expensive, and staying home for your family vacation this year.

Sell things you do not need and find a part-time job. Perhaps you can get an additional job and build up your earnings. In addition, you can make a comprehensive list of items you can sell. Unused gold jewelry can bring a good amount from local jewelry stores. A closetful of small items may add up to a fair amount at a garage or tag sale. Also, you might want to consider selling any investments you own.

Borrow from your retirement plan. Explore the details for your individual plan. You may borrow money from a 401(k) for a down payment or perform a withdrawal from an Individual Retirement Account. Be sure to find out about the tax ramifications, repayment terms, and possible early withdrawal penalties.

Request a generous gift from family. Many homebuyers somtimes get help with their down payment help from caring parents and other family members who are prepared to help them get into their own home. Your family members may be pleased to help you reach the goal of buying your first home.

Learn about housing finance agencies. Provisional loan programs are given to buyers in specific situations, such as low income purchasers or buyers looking to renovating homes in a targeted neighborhood, among others. Working with a housing finance agency, you probably will get a below market interest rate, down payment assistance and other benefits. Housing finance agencies may assist eligible homebuyers with a lower interest rate, get you your down payment, and provide other assistance. These non-profit programs were formed to boost the value of homes in certain areas.

Explore no-down and low-down mortgage loans.

• FHA loans

  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 and moderate-income families qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgage loans. FHA provides mortgage insurance to the private lenders, making the buyers eligible for a mortgage loan. Down payment totals for FHA loans are less than those for traditional mortgages, even though these loans have average interest rates. The down payment can be as low as 3 percent while the closing costs could be covered by the mortgage loan.

• VA loans

  VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which generally offers a reasonable interest rate, no down payment, and minimal closing costs. Although the VA doesn't provide the mortgage loans, it does issue a certificate of eligibility to qualify for a VA mortgage.

• Piggy-back loans

  You can fund your down payment using a second mortgage that closes along with the first. Usually the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. The borrower pays the remaining 10%, rather than come up with the typical 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller commits to lend you a piece of his own equity to help you get your down payment money. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Usually this kind of second mortgage will have higher interest.

Want to discuss down payments? Give us a call: 3032282254.