Putting Together Your Down Payment

Many people who would like to buy a new house qualify for a mortgage loan, but they don't have a lot of money to put up the standard down payment. Below are a few ways to put together a down payment

Reduce expenses and save. Scrutinize the budget to uncover ways you can cut expenses to save for your down payment. Also, you can look into bank programs in which some of your paycheck is automatically placed into a savings account each pay period. Some effective ways to build up funds include moving into housing that is less expensive, and skipping your family vacation for a year or two.

Work more and sell things you do not need. Look for an additional job. This can be rough, but the temporary trial can provide your down payment money. Additionally, you can make a comprehensive list of things you can sell. Broken gold jewelry can be sold at local jewelry stores. Multiple small items may add up to a nice sum at a garage or tag sale. Also, you can consider selling any investments you hold.

Tap into retirement funds. Explore the specifics of your particular plan. It is possible to pull out money from a 401(k) plan for a down payment or get a withdrawal from an Individual Retirement Account. Make sure you understand the tax ramifications, repayment terms, and early withdrawal penalties.

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

Research housing finance agencies. These agencies provide special mortgage loans for moderate and low income homebuyers, buyers with an interest in rehabilitating a house within a targeted area, and other certain types of buyers as defined by the agency. With the help of a housing finance agency, you probably will get an interest rate that is below market, down payment assistance and other advantages. These types of agencies may help you with a lower interest rate, get you your down payment, and provide other advantages. The central goal of not-for-profit housing finance agencies is promoting home ownership in targeted parts of the city.

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

• FHA loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income buyers qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time buyers and others who may not be eligible for a conventional mortgage on their own, by providing mortgage insurance to the private lenders. Interest rates for an FHA mortgage are normally the current interest rate, but the down payment requirements for an FHA loan are less than those of conventional loans. The required down payment may be as low as 3 percent and the closing costs may be included in the mortgage.

• VA loans

  VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which generally offers a reasonable rate of interest, no down payment, and minimal closing costs. Even though the mortgage loans don't originate from the VA, the office certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close along with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's price, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, rather than having to pull together the usual 20% down payment.

• Carry-Back loans

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

Need to talk about down payments? Give us a call at 3217777277.