Building Your Down Payment

Lots of buyers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Here's where you start

Slash the budget and build up savings. Look for ways you can trim your monthly expenses to put away money for a down payment. There are bank programs through which some of your paycheck is automatically transferred into a savings account every pay period. Some effective strategies to put together funds include moving into less expensive housing, and staying local for your family vacation this year.

Sell items you do not really need and find a part-time job. Look for an additional job. This can be exhausting, but the temporary trial can help you get your down payment. You can also get serious about the possessions you really need and the items you can put up for sale. A closetful of small things may add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you hold.

Borrow from retirement funds. Investigate the parameters of your retirement program. Some homebuyers get down payment money by withdrawing from their IRAs or borrowing from their 401(k) programs. Make sure you are clear about any penalties, the effect this will have on your income taxes, and repayment obligation.

Request a gift from your family. First-time homebuyers are often lucky enough to receive help with their down payment help from giving parents and other family members who may be anxious to help them get into their own home. Your family members may be willing to help you reach the goal of buying your first home.

Research housing finance agencies. Special mortgate loan programs are extended to buyers in certain situations, like low income buyers or future homeowners planning to renovating houses in a certain area, among others. With the help of this type of agency, you may receive an interest rate that is below market, down payment assistance and other benefits. These kinds of agencies may assist eligible buyers with a reduced rate of interest, help with your down payment, and provide other benefits. The central mission of not-for-profit housing finance agencies is to promote the purchase of homes in certain areas.

Research no-down and low-down mortgages.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income families get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who may not be eligible for a typical loan by themselves, by providing mortgage insurance to lenders. Interest rates with an FHA mortgage normally feature the market interest rate, while the down payment requirements with an FHA mortgage are below those of conventional loans. The down payment can go as low as three percent and the closing costs might be covered by the mortgage.

• VA mortgage loans

  VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which generally offers a low interest rate, no down payment, and minimal closing costs. While the VA does not issue the mortgages, it does issue a certificate of eligibility to apply for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close with the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage finances 80 percent. Instead of the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  With a carry-back 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. Often, this kind of second mortgage will have higher interest.

No matter your method of getting together your down payment funds, the satisfaction of owning your own home will be just as great!

Want to discuss the best options for down payments? Call us at 7193576601.