Building Your Down Payment

Lots of borrowers qualify for a mortgage loan, but they can't afford a large down payment. Here are a few methods that will help you get together a down payment

Slash your budget and build up savings. Be on the look-out for ways you can reduce your expenses to put away money for a down payment. There are bank programs in which a portion of your paycheck is automatically deposited into savings every pay period. You might look into some big expenses in your budget that you can do without, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or stay local for your family vacation.

Sell items you don't really need and get a second job. Maybe you can find a second job to get your down payment money. In addition, you can put together a comprehensive inventory of items you can sell. Unused gold jewelry can bring a good amount from local jewelers. A closetful of small items may add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you own.

Tap into your retirement funds. Explore the details of your particular plan. It is possible to borrow funds from a 401(k) for a down payment or make a withdrawal from an IRA. Make sure to learn about the tax ramifications, repayment terms, and possible early withdrawal penalties.

Ask for a generous gift from family. First-time homebuyers somtimes receive down payment help from giving parents and other family members who may be anxious to help them get into their own home. Your family members may be pleased to help you reach the milestone of owning your first home.

Contact housing finance agencies. These types of agencies provide provisional mortgate loan programs to low and moderate-income buyers, buyers interested in rehabilitating a home in a targeted part of the city, and other groups as defined by each finance agency. With the help of a housing finance agency, you may receive a below market interest rate, down payment assistance and other advantages. These kinds of agencies may help eligible homebuyers with a reduced rate of interest, help with your down payment, and offer other benefits. The primary mission of non-profit housing finance agencies is promoting the purchase of homes in certain parts of the city.

Explore no-down and low-down mortgage loan programs.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a vital part in aiding low to moderate-income individuals get 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 offers mortgage insurance to the private lenders, making the buyers eligible for a home loan. Down payment amounts for FHA mortgages are smaller than those with traditional mortgage loans, although these loans hold average interest rates. Closing costs can be included in the mortgage, and the down payment could be as low as 3 percent of the total amount.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan does not require a down payment, has limited closing costs, and provides a competitive rate of interest. Even though the mortgages don't originate from the VA, the department verfifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  You can fund your down payment through a second mortgage that closes at the same time as the first. Generally the piggyback loan is for 10 percent of the purchase price, and the first mortgage covers 80 percent. Instead of the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  With a carry-back mortgage, the you borrow part of the seller's home equity.. You would finance the largest portion of the purchase price with a traditional lending institution and borrow the remainder from the seller. Usually you will pay a somewhat higher rate on the loan financed by the seller.

Need to talk about your down payment? Call us: 3217777277.