Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to look into getting a new home, but aren't sure how you should put together your down payment?

Reduce expenses and save. Be on the look-out for ways you can reduce your expenditures to set aside money for a down payment. There are bank programs in which some of your paycheck is automatically transferred into a savings account each pay period. Some practical approaches to put together funds include moving into less expensive housing, and skipping your vacation for a year or two.

Work a second job and sell items you don't need. Maybe you can get a second job and build up your earnings. You can also get creative about the things you may be able to put up for sale. Maybe you own desirable items you can put up for sale at an auction website, or household items for a garage or tag sale. Also, you might want to consider selling any investments you own.

Borrow from retirement funds. Investigate the provisions of your retirement plan. Many people get down payment money by withdrawing funds from Individual Retirement Accounts or getting money out of 401(k) plans. Be sure you understand the tax ramifications, repayment terms, and early withdrawal penalties.

Request a gift from family. Many homebuyers are often fortunate enough to get help with their down payment assistance from giving family members who are able to help them get into their first home. Your family members may be inclined to help you reach the milestone of having your own home.

Learn about housing finance agencies. Special loan programs are extended to homebuyers in certain situations, like low income buyers or people looking to improve houses in a certain part of town, among others. Financing with a housing finance agency, you can receive a below market interest rate, down payment help and other benefits. These kinds of agencies can help eligible buyers with a reduced rate of interest, get you your down payment, and offer other benefits. These non-profit programs were formed to promote the value of homes in certain places.

Learn about low-down and no-down mortgages.

• FHA mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low and moderate-income individuals qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in qualifying for mortgage loans. FHA assists first-time homebuyers and others who might not be able to qualify for a typical loan by themselves, by providing mortgage insurance to the private lenders. Down payment sums for FHA mortgages are less than those with conventional mortgage loans, even though these loans hold current interest rates. The down payment may go as low as three percent while the closing costs may be covered by the mortgage.

• VA loans

  VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which usually offers a competitive fixed rate of interest, no down payment, and minimal closing costs. While the mortgages don't originate from the VA, the department certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes along with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's amount, and the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, instead of needing to put together the typical 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to loan you a portion of his own equity to help you get your down payment money. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Typically you'll pay a slightly higher rate on the loan financed by the seller.

No matter how you gather 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 at 7193576601.