Putting Together Your Down Payment

Lots of folks who are looking to buy a new house can easily qualify for various loan programs, but they can't afford a large down payment. We have a few ideas

Slash the budget and build up savings. Be on the look-out for ways you can trim your monthly expenses to put away money for a down payment. You also could enroll in an automatic savings plan at your bank to automatically have a specific amount from your paycheck deposited into your savings account. Some practical strategies to put together funds include moving into housing that is less expensive, and staying home for your vacation this year.

Sell things you do not need and get a part-time job. Try to find a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get creative about the items you can put up for sale. A closetful of small items can add up to a nice sum at a garage or tag sale. You could also research what any investments you hold could sell for.

Tap into retirement funds. Research the specifics of your particular plan. Some homebuyers get down payment money by withdrawing funds from IRAs or borrowing from their 401(k) programs. Be sure you are knowledgable about any penalties, the effect this may have on income taxes, and repayment obligation.

Ask for assistance from generous family members. Many homebuyers are often fortunate enough to receive down payment assistance from caring parents and other family members who are willing to help get them in their own home. Your family members may be willing to help you reach the goal of having your first home.

Contact housing finance agencies. These agencies provide special mortgage loans to moderate and low income borrowers, buyers with an interest in sprucing up a house within a targeted part of the city, and additional groups as specified by each agency. With the help of a housing finance agency, you probably will receive a below market interest rate, down payment help and other perks. Housing finance agencies can assist you with a reduced rate of interest, get you your down payment, and provide other advantages. These non-profit agencies to promote community in particular areas.

Find out about low-down and no-down mortgage loans.

• 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 significant part in aiding low to moderate-income Americans qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time buyers and others who might not be able to qualify for a typical mortgage on their own, by offering mortgage insurance to the lenders. Interest rates with an FHA mortgage usually feature the current interest rate, but the down payment amounts with an FHA mortgage will be below those of conventional loans. The down payment may be as low as 3 percent and the closing costs can be financed in the mortgage loan.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan does not require a down payment, has limited closing costs, and provides a competitive interest rate. While it's true that the mortgage loans aren't actually issued by the VA, the office certifies applicants by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Usually the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, rather than come up with the typical 20% down payment.

• Carry-Back loans

  In the case of a seller "carrying back a second mortgage," the seller loans you part of his or her equity. You would borrow the largest portion of the purchase price from a traditional lender and finance the remainder with the seller. Usually you'll pay a slightly higher interest rate on the loan financed by the seller.

Want to discuss down payments? Give us a call at 7193576601.