Building Your Down Payment

Many people who would like to buy a new home can qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to buy a new house, but don't know how to put together your down payment?

Slash the budget and build up savings. Scrutinize the budget to find extra money to go toward your down payment. Also, you can look into bank programs in which a portion of your paycheck is automatically transferred into savings each pay period. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay close to home for your family vacation.

Sell things you don't really need and get a part-time job. Try to get a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. In addition, you can put together an exhaustive list of items you can sell. Unused gold jewelry can be sold at local jewelry stores. Multiple small items might add up to a nice sum at a garage or tag sale. You could also research what any investments you hold could bring if sold.

Borrow funds from a retirement plan. Explore the details for your particular plan. Some homebuyers get down payment money from withdrawing from their IRAs or borrowing from their 401(k) plans. Make sure you understand about any penalties, the effect this will have on your taxes, and repayment obligation.

Ask for a gift from family. First-time buyers somtimes receive help with their down payment help from thoughtful family members who may be eager to help them get into their first home. Your family members may be eager to help you reach the milestone of buying your first home.

Contact housing finance agencies. These types of agencies offer special mortgage loans for moderate and low income buyers, buyers interested in sprucing up a residence in a targeted part of the city, and additional particular kinds of buyers as defined by each finance agency. With the help of a housing finance agency, you can receive an interest rate that is below market, down payment help and other perks. Housing finance agencies may help you with a lower interest rate, help with your down payment, and offer other assistance. These non-profit programs to promote home ownership in particular places.

Research no-down and low-down mortgages.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income families qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgages. FHA assists first-time buyers and others who may not be able to qualify for a conventional mortgage by themselves, by providing mortgage insurance to the lenders. Down payment sums for FHA mortgages are smaller than those with typical mortgage loans, although these loans come with average rates of interest. Closing costs may be included in the mortgage, and your down payment may be as low as 3 percent of the total.

• VA mortgage loans

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which usually offers a competitive fixed interest rate, no down payment, and minimal closing costs. While the VA does not finance the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes along with the first. Most of the time, the piggyback loan is for 10 percent of the purchase amount, while the first mortgage finances 80 percent. Rather than the usual 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

• Carry-Back loans

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

The feeling of accomplishment will be the same, no matter how you manage to put together your down payment. Your new home will be well worth it!

Need to talk about down payment options? Call us: (321) 777-7277.