Putting Together Your Down Payment

Lots of folks who would like to buy a new home qualify for several different kinds of mortgages, but they can't afford a large down payment. Here's where you start

Slash the budget and build up savings. Scrutinize your budget to find ways you can cut expenses to save for your down payment. Also, you can look into bank programs through which a portion of your paycheck is automatically transferred into savings each pay period. Some practical strategies to put together funds include moving into a residence that is less expensive, and staying home for your family vacation for a year or two.

Work more and sell items you do not need. Maybe you can find an additional job to get your down payment money. You can also get creative about the items you can put up for sale. Maybe you have collectibles you can sell on an auction website, or quality household items for a garage or tag sale. Also, you can look into selling any investments you own.

Borrow money from a retirement plan. Check the provisions of your retirement plan. You can borrow funds from a 401(k) for a down payment or get a withdrawal from an Individual Retirement Account. You will need to ensure you understand about any penalties, the way this could affect on your taxes, and repayment obligation.

Ask for help from members of your family. First-time homebuyers are sometimes fortunate enough to receive down payment help from giving parents and other family members who are willing to help them get into their own home. Your family members may be happy at the chance to help you reach the goal of having your first home.

Research housing finance agencies. These agencies provide provisional mortgage programs for low and moderate-income buyers, buyers interested in renovating a residence within a specific part of the city, and additional groups as specified by the agency. Financing with this type of agency, you may receive an interest rate that is below market, down payment assistance and other benefits. These kinds of agencies can assist eligible buyers with a reduced rate of interest, get you your down payment, and offer other benefits. These non-profit agencies exist to build up the value of homes in specific neighborhoods.

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

• FHA loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in aiding low to moderate-income Americans qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to get home financing. FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for financing. Down payment requirements for FHA loans are less than those of traditional mortgage loans, although these loans come with current rates of interest. The down payment can be as low as three percent and the closing costs could be included in the mortgage.

• VA mortgages

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people can qualify for a VA loan, which typically offers a low fixed interest rate, no down payment, and reduced closing costs. Although the mortgages don't originate from the VA, the office verfifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  You can finance your down payment with a second mortgage that closes along with the first. Usually the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than putting the usual 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to loan you a piece of his own equity to assist you with your down payment money. You would finance the largest portion of the purchase price with a traditional lending institution and finance the remaining amount with the seller. Usually you will pay a somewhat higher rate with the loan financed by the seller.

No matter how you gather your down payment money, the satisfaction of owning your own home will be just as great!

Want to discuss down payment options? Call us: (321) 777-7277.