Building Your Down Payment

Lots of borrowers can qualify for a loan, but they can't afford a large down payment. Want to look into getting a new home, but don't know how to put together your down payment?

Slash your budget and build up savings. Be on the look-out for ways to reduce your monthly expenditures to put away money for a down payment. You also might enroll in an automatic savings plan to have a portion of your pay automatically deposited into savings. Some effective methods to build up funds include moving into a residence that is less expensive, and staying local for your family vacation this year.

Work more and sell items you don't need. Try to find an additional job. This can be exhausting, but the temporary trial can provide your down payment money. You can also get creative about the items you migh be able to sell. You might own desirable items you can sell on an online auction, or quality household goods for a tag or garage sale. Also, you can think about selling any investments you own.

Borrow from your retirement funds. Investigate the parameters of your retirement plan. You can borrow money from a 401(k) for you down payment or make a withdrawal from an IRA. Make sure you understand about any penalties, the effect this may have on income taxes, and repayment terms.

Ask for a gift from family. First-time buyers are often fortunate enough to get down payment assistance from gracious family members who are prepared to help get them in their own home. Your family members may be inclined to help you reach the goal of having your own home.

Learn about housing finance agencies. Provisional loan programs are extended to buyers in certain circumstances, like low income purchasers or homebuyers planning to improve houses in a specific neighborhood, among others. Working with a housing finance agency, you can receive a below market interest rate, down payment assistance and other benefits. These kinds of agencies can help you with a lower rate of interest, get you your down payment, and offer other advantages. The principal purpose of not-for-profit housing finance agencies is boosting the purchase of homes in particular places.

Learn about low-down and no-down mortgage loan programs.

• FHA mortgages

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in assisting low and moderate-income buyers get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, enabling homebuyers who will not be eligible for a typical mortgage, to get a mortgage. Interest rates for an FHA loan are generally the current interest rate, while the down payment amounts with an FHA loan are smaller than those of conventional loans. Closing costs can be financed within the mortgage, and the down payment might be as low as 3 percent of the total amount.

• VA mortgage loans

  VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans qualify for a VA loan, which generally offers a competitive interest rate, no down payment, and minimal closing costs. Although the VA doesn't issue the mortgages, it does certify eligibility to qualify for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes along with the first. In most cases the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. Rather than the usual 20 percent down payment, the homebuyer just has 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.. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a somewhat higher interest rate on the loan financed by the seller.

No matter how you gather your down payment, the satisfaction of reaching the goal of owning your own home will be just as great!

Want to discuss down payment options? Call us at 4056158543.