Your Down Payment

Lots of buyers qualify for a loan, but they don't have a large sum of cash to pay the standard down payment. Here's where to get started

Tighten your belt and save. Look for ways to trim your expenses to put away money for a down payment. There are bank programs through which some of your paycheck is automatically transferred into a savings account each pay period. You might look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you might move into less expensive housing, or stay close to home for your vacation.

Sell items you do not need and get a second job. Try to find a second job. This can be rough, but the temporary trial can provide your down payment money. Additionally, you can make a comprehensive inventory of items you may be able to sell. Unused gold jewelry can bring a good price from local jewelers. You might own desirable items you can sell at an online auction, or household goods for a tag or garage sale. You might also look into what your investments will bring if sold.

Tap into your retirement funds. Check the provisions of your particular plan. Some people get down payment money by withdrawing from their Individual Retirement Accounts or taking funds out of their 401(k) plans. Be sure you comprehend the tax consequences, your obligation for repayment, and possible early withdrawal penalties.

Ask for a gift from family. First-time homebuyers are sometimes fortunate enough to receive help with their down payment assistance from gracious family members who may be willing to help get them in their own home. Your family members may be eager to help you reach the milestone of buying your first home.

Research housing finance agencies. These agencies provide special mortgate loan programs- for moderate and low income homebuyers, buyers with an interest in rehabilitating a house within a specific part of the city, and additional groups as specified by each finance agency. With the help of this type of agency, you can receive an interest rate that is below market, down payment assistance and other perks. These kinds of agencies may help eligible buyers with a reduced interest rate, get you your down payment, and offer other benefits. These non-profit programs were established to build up the value of homes in certain neighborhoods.

Learn about low-down and no-down mortgage loan programs.

• 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 an important part in helping low and moderate-income individuals get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to get mortgage loans. FHA provides mortgage insurance to the private lenders, enabling homebuyers who will not qualify for a traditional loan, to receive a mortgage. Down payment sums for FHA mortgages are less than those with conventional mortgages, although these loans have current rates of interest. The down payment may be as low as 3 percent and the closing costs could be financed in the mortgage loan.

• VA loans

  VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which usually offers a competitive rate of interest, no down payment, and reduced closing costs. While it's true that the mortgage loans aren't actually financed by the VA, the office verfifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close with the first. Usually the piggyback loan takes care of 10 percent of the purchase amount, while the first mortgage finances 80 percent. Instead of the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to loan you a portion of his home equity to help you get your down payment funds. The buyer finances most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Often, this type of second mortgage has a higher rate of interest.

Want to discuss down payments? Give us a call at (321) 777-7277.