Putting Together Your Down Payment

Lots of buyers can easily qualify for various loan programs, but they can't afford a large down payment. Want to buy a new house, but aren't sure how you should get together your down payment?

Tighten your belt and save. Scrutinize your budget to uncover ways you can cut expenses to go toward your down payment. You could also try enrolling in an automatic savings plan to have a portion of your payroll automatically moved into your savings account. You might look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or stay close to home for your family vacation.

Sell items you don't need and find a second job. Maybe you can get a second job to get your down payment money. In addition, you can put together an exhaustive list of items you may be able to sell. Broken gold jewelry can be sold at local jewelry stores. You might have desirable items you can put up for sale at an online auction, or household items for a garage or tag sale. Also, you can think about selling any investments you hold.

Tap into retirement funds. Explore the specifics of your particular plan. It is possible to take out money from a 401(k) for you down payment or perform a withdrawal from an IRA. You will need to ensure you know about any penalties, the effect this could have on your income taxes, and repayment obligation.

Request a generous gift from your family. First-time homebuyers are often fortunate enough to get help with their down payment help from thoughtful family members who may be eager to help them get into their first home. Your family members may be willing to help you reach the milestone of buying your first home.

Research housing finance agencies. Provisional mortgate loan programs are offered to buyers in specific circumstances, such as low income purchasers or buyers planning to remodel houses in a certain neighborhood, among others. With the help of this type of agency, you probably will get an interest rate that is below market, down payment help and other advantages. Housing finance agencies can assist you with a reduced interest rate, help with your down payment, and provide other benefits. The main goal of not-for-profit housing finance agencies is boosting the purchase of homes in specific places.

Find out about low-down and no-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 a significant role in aiding low to moderate-income buyers qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for financing. Interest rates with an FHA loan are generally the current interest rate, while the down payment with an FHA loan are lower than those of conventional loans. The required down payment may be as low as 3 percent while the closing costs might be covered by the mortgage loan.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This particular loan does not require a down payment, has reduced closing costs, and provides the benefit of a competitive interest rate. While the mortgage loans aren't actually provided by the VA, the office certifies applicants by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. Usually the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. The borrower covers the remaining 10%, rather than come up with the typical 20% down payment.

• Carry-Back loans

  In the case of the seller "carrying back a second mortgage," the seller loans you part of his or her home equity. You would borrow the largest portion of the purchase price from a traditional lender and borrow the remaining amount from the seller. Usually this form of second mortgage will have a higher rate of interest.

Want to discuss the best options for down payments? Call us: 3217777277.