Putting Together Your Down Payment

Many buyers qualify for various loan programs, but they don't have a large sum of cash to pay a down payment. Want to look into getting a new home, but aren't sure how you should get together your down payment?

Cut expenses and save. Turn your budget inside out to discover extra money to save for your down payment. You might also decide to enroll in an automatic savings plan to automatically have a predetermined amount from your paycheck moved into savings. You might look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you may move into less expensive housing, or stay close to home for your family vacation.

Work a second job and sell items you don't need. Perhaps you can get a second job and save your earnings. Additionally, you can make a comprehensive list of things you may be able to sell. Broken gold jewelry can be sold at local jewelry stores. Maybe you own desirable items you can put up for sale on an online auction, or household goods for a tag or garage sale. You could also look into what any investments you hold could bring if sold.

Tap into your retirement funds. Explore the specifics of your particular plan. Some people get down payment money from withdrawing from IRAs or getting money out of their 401(k) programs. Make sure to find out about the tax ramifications, your obligation for repayment, and possible early withdrawal penalties.

Request a generous gift from your family. Many homebuyers somtimes receive down payment help from giving family members who are willing to help them get into their first home. Your family members may be eager to help you reach the goal of buying your first home.

Learn about housing finance agencies. These types of agencies provide special mortgage loans for moderate and low income homebuyers, buyers with an interest in rehabilitating a residence within a specific area, and additional certain types of buyers as specified by the finance agency. Working with a housing finance agency, you may be given a below market interest rate, down payment assistance and other benefits. These kinds of agencies can help you with a lower interest rate, get you your down payment, and provide other advantages. These non-profit agencies exist to build up community in specific places.

Explore no-down and low-down mortgages.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in aiding low and moderate-income Americans qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get mortgage loans. FHA helps first-time homebuyers and others who may not be eligible for a traditional loan on their own, by offering mortgage insurance to the private lenders. Down payment totals for FHA loans are smaller than those for traditional mortgages, although these mortgages come with average rates of interest. The down payment may be as low as three percent while the closing costs could be included in the mortgage loan.

• VA mortgage loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which typically offers a competitive fixed interest rate, no down payment, and minimal closing costs. Although the mortgages don't originate from the VA, the department verfifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  You may finance your down payment with a second mortgage that closes at the same time as the first. Generally the piggyback loan is for 10 percent of the home's price, and the first mortgage covers 80 percent. The borrower pays the remaining 10%, instead of come up with the typical 20% down payment.

• Carry-Back loans

  In the option of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. In this scenario, you would borrow the largest portion of the purchase price from a traditional lender and borrow the remaining amount from the seller. Generally, this form of second mortgage has a higher rate of interest.

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

Want to discuss down payment options? Call us at 7193576601.