Building Your Down Payment

Lots of people who are looking to purchase a new house qualify for a mortgage loan, but they can't afford a large down payment. Do you want to look into getting a new home, but don't know how to put together a down payment?

Slash your budget and build up savings. Turn your budget upside-down to discover ways you can cut expenses to save for your down payment. You also might enroll in an automatic savings plan at your bank to automatically have a predetermined amount from your take-home pay deposited into savings. You would be wise to look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or skip a family vacation.

Work a second job and sell things you don't need. Try to find a second job. This can be rough, but the temporary trial can help you get your down payment. Additionally, you can put together an exhaustive list of things you can sell. Unused gold jewelry can be sold at local jewelers. Maybe you have desirable items you can put up for sale at an auction website, or quality household items for a tag or garage sale. You could also research what any investments you hold could bring if sold.

Borrow from retirement funds. Research the details for your particular plan. It is possible to borrow funds from a 401(k) for you down payment or withdraw from an IRA. You will want to make sure you know about any penalties, the effect this will have on income taxes, and repayment terms.

Ask for help from members of your family. First-time homebuyers are sometimes lucky enough to get down payment help from thoughtful family members who may be prepared to help them get into their own home. Your family members may be eager to help you reach the milestone of buying your own home.

Learn about housing finance agencies. These agencies offer special mortgage loans to low and moderate-income buyers, buyers with an interest in renovating a home in a targeted area, and additional certain types of buyers as specified by each finance agency. Financing through a housing finance agency, you probably will get a below market interest rate, down payment assistance and other benefits. These types of agencies may assist you with a reduced interest rate, help with your down payment, and provide other assistance. The central mission of not-for-profit housing finance agencies is promoting the purchase of homes in particular places.

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

• 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 part in helping low to moderate-income Americans get mortgage loans. 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, enabling new homebuyers who will not be eligible for a typical mortgage loan, to get a mortgage. Interest rates for an FHA mortgage typically feature the current interest rate, but the down payment for an FHA mortgage will be below those of conventional loans. The required down payment can be as low as three percent and the closing costs can be included in the mortgage.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This special loan does not require a down payment, has mimimal closing costs, and provides a competitive rate of interest. While the mortgages don't originate from the VA, the department certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  You may finance a down payment using a second mortgage that closes at the same time as the first. In most cases the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of putting the usual 20% down payment.

• Carry-Back loans

  We a seller carries back a second mortgage, the seller loans you part of his or her equity. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lending institution and finance the remaining amount with the seller. Usually you'll pay a slightly higher interest rate with the loan from the seller.

No matter your method of pulling together your down payment, the thrill of reaching the goal of owning your own home will be just as great!

Need to talk about down payment options? Give us a call: 7193576601.