Building Your Down Payment

Lots of buyers qualify for several different kinds of mortgages, but they don't have a lot of money to put up a down payment. Below are a few straightforward ways to put together your down payment

Slash your budget and build up savings. Be on the look-out for ways to trim your expenditures to set aside funds for a down payment. You might also try enrolling in an automatic savings plan to have a portion of your pay automatically deposited into your savings account. Some practical approaches to build up funds include moving into less expensive housing, and staying local for your vacation for a year or two.

Work more and sell things you don't need. Perhaps you can get a second job and build up your earnings. You can also get serious about the possessions you actually need and the things you can put up for sale. You may own desirable items you can put up for sale at an auction website, or household goods for a garage or tag sale. Also, you might want to think about selling any investments you own.

Borrow from retirement funds. Check the parameters of your specific program. Many homebuyers get down payment money by withdrawing from IRAs or getting funds out of their 401(k) programs. Make sure to learn about the tax consequences, repayment terms, and penalties for withdrawing early.

Request a gift from your family. First-time homebuyers somtimes receive down payment assistance from thoughtful family members who are prepared to help them get into their first home. Your family members may be pleased at the chance to help you reach the goal of having your own home.

Learn about housing finance agencies. Special mortgate loan programs are provided to homebuyers in certain circumstances, like low income homebuyers or homebuyers planning to remodel homes in a targeted neighborhood, among others. With the help of a housing finance agency, you probably will be given an interest rate that is below market, down payment help and other benefits. Housing finance agencies may assist you with a reduced interest rate, help with your down payment, and provide other assistance. These non-profit agencies exist to boost home ownership in certain places.

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

• FHA loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low to moderate-income Americans get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, ensuring the buyers are eligible for a loan. Down payment totals for FHA mortgages are less than those of conventional mortgage loans, although these mortgages have current interest rates. The down payment can go as low as 3 percent while the closing costs can be financed in the mortgage loan.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan requires no down payment, has limited closing costs, and provides a competitive interest rate. While the VA does not issue the mortgages, it does certify eligibility to qualify for a VA mortgage.

• Piggy-back loans

  You can fund a down payment with a second mortgage that closes with the first. Generally the piggyback loan is for 10 percent of the home's price, while the first mortgage finances 80 percent. The borrower covers the remaining 10%, instead of putting the usual 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to lend you some of his own equity to help you get your down payment funds. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Typically you'll pay a somewhat higher rate with the loan from the seller.

No matter your method of pulling together your down payment, the thrill of reaching the goal of living in your own home will be just as sweet!

Want to discuss the best options for down payments? Call us: 5622061550.