Putting Together Your Down Payment

Many people who would like to buy a new house qualify for various loan programs, but they don't have a lot of money to pay the standard down payment. Want to look into getting a new house, but don't know how you should put together a down payment?

Slash the budget and build up savings. Scrutinize the budget to uncover ways you can cut expenses to go toward your down payment. You might also decide to enroll in an automatic savings plan at your bank to automatically have a specific amount from your paycheck moved into your savings account. You might look into some big expenses in your budget that you can live without, or reduce, at least temporarily. For example, you might move into less expensive housing, or skip a family vacation.

Sell items you do not really need and get a part-time job. Perhaps you can get an additional job to get your down payment money. In addition, you can put together an exhaustive inventory of things you can sell. Broken gold jewelry can bring a good price from local jewelers. Multiple small things may add up to a nice sum at a garage or tag sale. You might also explore what any investments you own could sell for.

Tap into retirement funds. Check the parameters of your retirement program. You can borrow funds from a 401(k) plan for a down payment or withdraw from an IRA. Be sure you are clear about any penalties, the way this could affect on taxes, and repayment obligation.

Ask for help from generous family members. Many buyers somtimes get help with their down payment assistance from giving parents and other family members who are willing to help get them in their own home. Your family members may be happy at the chance to help you reach the goal of owning your first home.

Research housing finance agencies. These agencies provide provisional mortgage loans to moderate and low income borrowers, buyers interested in renovating a home within a particular part of the city, and additional groups as specified by the finance agency. With the help of a housing finance agency, you probably will get a below market interest rate, down payment assistance and other benefits. These types of agencies can help eligible homebuyers with a reduced interest rate, help with your down payment, and offer other assistance. The primary purpose of not-for-profit housing finance agencies is build up the purchase of homes in targeted places.

Learn about low-down and no-down mortgage loans.

• 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 qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time buyers and others who might not be eligible for a conventional loan by themselves, by providing mortgage insurance to lenders. Down payment requirements for FHA mortgages are less than those with conventional mortgages, although these loans come with current interest rates. The down payment may go as low as three percent while the closing costs may be financed in the mortgage loan.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This specialized loan requires no down payment, has mimimal closing costs, and offers a competitive interest rate. Even though the VA does not finance the loans, it does certify eligibility to apply for a VA loan.

• Piggy-back loans

  You can finance your down payment with a second mortgage that closes along with the first. Generally the piggyback loan takes care of 10 percent of the purchase amount, while the first mortgage covers 80 percent. Rather than the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to loan you some of his own equity to assist you with your down payment funds. You would finance the largest portion of the purchase price with a traditional mortgage lending institution and borrow the remaining amount from the seller. Usually you will pay a somewhat higher interest rate with the loan from the seller.

Want to discuss down payment options? Give us a call at 4056158543.