Your Down Payment

Lots of borrowers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to buy a new home, but don't know how to put together a down payment?

Reduce expenses and save. Be on the look-out for ways to trim your monthly expenses to put away money for a down payment. Also, you can look into bank programs in which some of your paycheck is automatically placed into savings each pay period. You could look into some big expenses in your spending history that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a family vacation.

Work more and sell items you don't need. Try to get an additional job. This can be exhausting, but the temporary difficulty can help you get your down payment. In addition, you can make an exhaustive inventory of things you can sell. Unused gold jewelry can be sold at local jewelry stores. Maybe you own desirable items you can sell at an online auction, or household items for a tag or garage sale. Also, you can think about selling any investments you own.

Borrow from a retirement plan. Check the provisions of your particular plan. Some homebuyers get down payment money from withdrawing from their IRAs or borrowing from their 401(k) programs. Be sure to ask your plan representative about the tax consequences, your obligation for repaying funds, and any penalties for withdrawing early.

Ask for a gift from family. First-time buyers are sometimes lucky enough to receive down payment help from thoughtful parents and other family members who are prepared to help get them in their first home. Your family members may be willing to help you reach the goal of having your first home.

Research housing finance agencies. These agencies offer special loan programs to moderate and low income buyers, buyers with an interest in sprucing up a house in a particular area, and other groups as specified by the finance agency. With the help of this kind of agency, you can receive a below market interest rate, down payment assistance and other benefits. Housing finance agencies may help eligible homebuyers with a reduced interest rate, help with your down payment, and offer other benefits. The main mission of not-for-profit housing finance agencies is build up the purchase of homes in specific places.

Research no-down and low-down mortgage loans.

• FHA mortgages

  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 families qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who need to get mortgage loans. FHA assists first-time buyers and others who might not be able to qualify for a conventional mortgage on their own, by offering mortgage insurance to private lenders. Interest rates with an FHA loan are generally the going interest rate, but the down payment with an FHA mortgage are below those of conventional loans. Closing costs can be covered by the mortgage, while the down payment may be as low as 3 percent of the purchase price.

• VA mortgage loans

  VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which generally offers a competitive rate of interest, no down payment, and limited closing costs. While the VA doesn't actually issue the loans, it does issue a certificate of eligibility to qualify for a VA mortgage.

• Piggy-back loans

  You can fund your down payment with a second mortgage that closes along with the first. Most of the time, the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. The borrower pays the remaining 10%, rather than having to pull together the usual 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to lend you part of his own equity to help you with your down payment money. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lending institution and finance the remaining amount with the seller. Usually you will pay a somewhat higher interest rate on the loan financed by the seller.

Need to talk about the best options for down payments? Give us a call: 3217777277.