Your Down Payment

Lots of borrowers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to look into getting a new house, but aren't sure how you should get together your down payment?

Tighten your belt and save. Turn your budget inside out to find ways you can cut expenses to go toward your down payment. You also might enroll in an automatic savings plan at your bank to automatically have a set portion of your take-home pay transferred into your savings account. Some practical ways to save additional funds include moving into less expensive housing, and staying home for your family vacation for a year or two.

Work more and sell items you do not need. Maybe you can get a second job and build up your earnings. You can also get creative about the things you migh be able to sell. A closetful of small items could add up to a nice sum at a garage or tag sale. You could also look into what your investments will bring if sold.

Borrow your down payment from a retirement plan. Investigate the provisions of your specific plan. It is possible to borrow money from a 401(k) plan for a down payment or get a withdrawal from an IRA. You will want to make sure you know about any penalties, the way this could affect on your income taxes, and repayment terms.

Ask for assistance from generous members of your family. First-time homebuyers somtimes get help with their down payment help from gracious family members who may be eager to help them get into their own home. Your family members may be eager to help you reach the goal of buying your first home.

Research housing finance agencies. Special mortgage loans are extended to buyers in specific circumstances, such as low income purchasers or buyers looking to renovating homes in a certain area, among others. Working through a housing finance agency, you probably will receive an interest rate that is below market, down payment help and other perks. These types of agencies can assist you with a reduced interest rate, help with your down payment, and provide other benefits. The principal purpose of not-for-profit housing finance agencies is to boost the purchase of homes in particular parts of the city.

Explore no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income buyers get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to get mortgages. FHA aids first-time homebuyers and others who would not be able to qualify for a conventional loan by themselves, by providing mortgage insurance to lenders. Interest rates for an FHA mortgage are normally the going interest rate, but the down payment amounts with an FHA loan will be lower than those of conventional loans. The required down payment may go as low as 3 percent and the closing costs could be financed in the mortgage loan.

• VA loans

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

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close along with the first. Generally the piggyback loan is for 10 percent of the purchase price, and the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, rather than come up with the usual 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller commits to lend you a piece of his own equity to help you get your down payment money. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a slightly higher rate on the loan financed by the seller.

No matter how you gather down payment funds, the thrill of reaching the goal of living in your own home will be just as great!

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