Building Your Down Payment

Lots of borrowers can easily qualify for a loan, but they don't have a large sum of cash to pay a down payment. Here are a few methods that will help you get together your down payment

Tighten your belt and save. Look for ways you can trim your expenses to save toward a down payment. You also might enroll in an automatic savings plan to automatically have a set amount from your take-home pay moved into savings. You could look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay close to home for your vacation.

Sell items you don't really need and find a second job. Try to get a second job. This can be rough, but the temporary difficulty can help you get your down payment. Additionally, you can put together an exhaustive list of items you may be able to sell. Unused gold jewelry can be sold at local jewelry stores. A closetful of small items can add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Borrow your down payment from a retirement plan. Research the details of your particular plan. Many homebuyers get down payment money by withdrawing from IRAs or getting funds out of 401(k) programs. Be sure to ask your plan representative about the tax ramifications, repayment terms, and possible penalties for withdrawing early.

Ask for assistance from generous members of your family. First-time buyers somtimes receive help with their down payment help from giving family members who may be able to help them get into their own home. Your family members may be inclined to help you reach the goal of buying your own home.

Contact housing finance agencies. These agencies provide provisional mortgate loan programs to moderate and low income buyers, buyers interested in remodeling a residence in a targeted area, and other particular kinds of buyers as defined by the finance agency. With the help of this kind of agency, you can be given an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies may assist you with a reduced interest rate, help with your down payment, and provide other advantages. The main goal of non-profit housing finance agencies is to promote the purchase of homes in particular areas.

Find out about low-down and no-down mortgage loans.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low to moderate-income individuals qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who need to get home financing. FHA assists first-time homebuyers and others who might not be eligible for a conventional mortgage by themselves, by offering mortgage insurance to the lenders. Down payment totals for FHA mortgages are below those for typical mortgages, although these loans hold average interest rates. The required down payment may be as low as 3 percent while the closing costs could be financed in the mortgage loan.

• VA loans

  VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can qualify for a VA loan, which typically offers a low interest rate, no down payment, and limited closing costs. While it's true that the loans aren't actually provided by the VA, the department certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  You can fund your down payment using a second mortgage that closes along with the first. Most of the time, the first mortgage is for 80% of the purchase price and the "piggyback" funds 10%. In contrast to the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  We a seller carries back a second mortgage, the seller loans you part of his or her home equity. In this scenario, you would finance the majority of the purchase price with a traditional mortgage lending institution and finance the remainder with the seller. Usually you'll pay a somewhat higher interest rate with the loan from the seller.

The satisfaction will be the same, no matter which approach you use to pull together your down payment. Your new home will be your reward!

Need to talk about down payment options? Give us a call at (321) 777-7277.