Building Your Down Payment

Lots of folks who would like to buy a new house can qualify for several different kinds of mortgages, but they don't have a lot of money to put up the standard down payment. We have a few suggestions

Tighten your belt and save. Look for ways to trim your expenditures to set aside money for a down payment. There are bank programs through which a portion of your paycheck is automatically transferred into savings each pay period. Some effective methods to save additional funds include moving into less expensive housing, and skipping a year's vacation.

Work more and sell things you do not need. Maybe you can find a second job to get your down payment money. You can also get serious about the possessions you really need and the items you could be able to put up for sale. You may own desirable items you can put up for sale at an auction website, or household items for a tag or garage sale. Also, you might want to consider selling any investments you hold.

Borrow funds from your retirement plan. Investigate the parameters of your particular program. You can borrow money from a 401(k) plan for you down payment or perform a withdrawal from an Individual Retirement Account. Make sure you understand about any penalties, the way this may affect on taxes, and repayment terms.

Ask for a generous gift from family. First-time homebuyers are sometimes lucky enough to get help with their down payment assistance from caring parents and other family members who are eager to help them get into their first home. Your family members may be inclined to help you reach the milestone of buying your first home.

Contact housing finance agencies. These agencies provide provisional loan programs to low and moderate-income homebuyers, buyers interested in rehabilitating a home within a particular part of the city, and other groups as defined by each agency. Working through this kind of agency, you may get a below market interest rate, down payment assistance and other advantages. These kinds of agencies can assist you with a lower rate of interest, help with your down payment, and provide other assistance. The primary mission of not-for-profit housing finance agencies is to boost the purchase of homes in specific areas.

Learn about low-down and no-down mortgage loans.

• Federal Housing Administration (FHA) loans

  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 aiding low and moderate-income individuals get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get mortgages. FHA helps first-time homebuyers and others who might not be able to qualify for a conventional mortgage on their own, by providing mortgage insurance to the lenders. Interest rates for an FHA loan usually feature the going interest rate, but the down payment requirements with an FHA loan are below those of conventional loans. The down payment can go as low as three percent and the closing costs can be packaged in the mortgage.

• VA mortgage loans

  VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which generally offers a reasonable interest rate, no down payment, and reduced closing costs. While it's true that the loans aren't actually issued by the VA, the office verfifies applicants by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Generally the piggyback loan is for 10 percent of the purchase amount, and the first mortgage finances 80 percent. Rather than the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to lend you a piece of his home equity to help you with your down payment money. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically, this form of second mortgage has a higher rate of interest.

No matter how you gather down payment funds, the thrill of reaching the goal of living in your own home will be just as sweet!

Want to discuss down payment options? Give us a call at 5122916100.