Your Down Payment

Lots of buyers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to buy a new home, but don't know how to put together a down payment?

Slash your budget and build up savings. Look for ways you can reduce your monthly expenditures to set aside funds for a down payment. Also, you can look into bank programs in which some of your paycheck is automatically placed into savings every pay period. Some practical ways to save additional funds include moving into housing that is less expensive, and skipping your family vacation for a year or two.

Sell things you do not really need and find a second job. Try to get an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the items you could be able to sell. You might have collectibles you can put up for sale at an auction website, or quality household goods for a tag or garage sale. You could also research what any investments you hold will bring if sold.

Borrow funds from a retirement plan. Explore the specifics for your individual plan. Many homebuyers get down payment money from withdrawing from their Individual Retirement Accounts or borrowing from 401(k) plans. Be sure you understand the tax consequences, repayment terms, and early withdrawal penalties.

Ask for assistance from generous members of your family. First-time buyers somtimes get help with their down payment assistance from thoughtful parents and other family members who may be prepared to help them get into their first home. Your family members may be pleased to help you reach the milestone of owning your first home.

Research housing finance agencies. Special mortgage loans are extended to homebuyers in certain situations, like low income buyers or people planning to remodel houses in a certain neighborhood, among others. Working with this type of agency, you can be given a below market interest rate, down payment assistance and other perks. These types of agencies can help eligible homebuyers with a reduced rate of interest, help with your down payment, and provide other advantages. The primary purpose of non-profit housing finance agencies is build up the purchase of homes in specific parts of the city.

Research no-down and low-down mortgage loans.

• FHA mortgages

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in helping low to moderate-income buyers get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgage loans. FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a home loan. Interest rates for an FHA mortgage usually feature the going interest rate, but the down payment requirements with an FHA loan will be below those of conventional loans. The down payment can be as low as 3 percent while the closing costs might be financed in the mortgage.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This particular loan requires no down payment, has reduced closing costs, and offers a competitive interest rate. Although the VA doesn't issue the loans, it does certify eligibility to apply for a VA mortgage.

• Piggy-back loans

  You can finance a down payment with a second mortgage that closes with the first. Most of the time, the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. The borrower covers the remaining 10%, rather than come up with the usual 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to loan you a portion of his own equity to assist you with your down payment money. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Usually you'll pay a slightly higher interest rate on the loan from the seller.

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