Building Your Down Payment

Many people who would like to buy a new home can easily qualify for a loan, but they don't have a lot of cash to pay the standard down payment. Below are a few straightforward methods that will help you put together a down payment

Slash your budget and build up savings. Turn your budget upside-down to find ways you can cut expenses to save for your down payment. You could also try enrolling in an automatic savings plan to have a portion of your pay automatically moved into a savings account. Some practical methods to save additional funds include moving into less expensive housing, and staying local for your vacation this year.

Work more and sell things you do not need. Try to get a second job. This can be rough, but the temporary difficulty can provide your down payment money. You can also get creative about the items you can put up for sale. Maybe you own collectibles you can sell at an auction website, or quality household items for a garage or tag sale. Also, you can consider selling any investments you hold.

Borrow from your retirement plan. Research the specifics for your individual plan. It is possible to pull out money from a 401(k) plan for a down payment or get a withdrawal from an IRA. Be sure to ask your plan representative about the tax consequences, your obligation for repaying the money, and penalties for withdrawing early.

Ask for help from generous members of your family. First-time buyers are often fortunate enough to receive down payment assistance from giving family members who may be eager to help them get into their own home. Your family members may be eager to help you reach the milestone of owning your own home.

Research housing finance agencies. These types of agencies provide provisional loan programs to moderate and low income borrowers, buyers with an interest in remodeling a home in a targeted area, and other specific kinds of buyers as defined by the agency. Financing with a housing finance agency, you can get an interest rate that is below market, down payment assistance and other perks. These types of agencies may assist you with a lower interest rate, get you your down payment, and offer other advantages. These non-profit programs exist to build up community in certain neighborhoods.

Explore no-down and low-down mortgages.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low to moderate-income buyers get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting mortgage loans. FHA provides mortgage insurance to private lenders, enabling buyers who may not qualify for a typical mortgage, to get financing. Down payment amounts for FHA loans are lower than those for typical mortgages, although these mortgages have average interest rates. Closing costs may be financed in the mortgage, while your down payment may be as low as 3 percent of the total amount.

• VA loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which generally offers a low fixed interest rate, no down payment, and minimal closing costs. Although the mortgages 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 closes at the same time as the first. Most of the time, the piggyback loan takes care of 10 percent of the home's price, while the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In the option of a seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. The buyer finances most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a somewhat higher interest rate with the loan financed by the seller.

The satisfaction will be the same, no matter how you manage to come up with the down payment. Your new home will be your reward!

Need to talk about the best options for down payments? Give us a call at (321) 777-7277.