Putting Together Your Down Payment

Many folks who would like to purchase a new home qualify for various loan programs, but they don't have a lot of money to pay a down payment. We have a few suggestions

Reduce expenses and save. Scrutinize the budget to find extra money to go toward your down payment. Also, you can look into bank programs in which some of your paycheck is automatically deposited into savings each pay period. Some practical methods to save additional funds include moving into less expensive housing, and skipping your vacation for a year or two.

Sell things you don't need and get a part-time job. Try to find an additional job. This can be rough, but the temporary difficulty can provide your down payment money. You can also get creative about the things you could be able to sell. A closetful of small things might add up to a fair amount at a garage or tag sale. Also, you can consider selling any investments you hold.

Borrow your down payment from a retirement plan. Investigate the provisions of your specific plan. It is possible to borrow funds from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Be sure you know about any penalties, the effect this could have on your income taxes, and repayment obligation.

Ask for a gift from family. Many buyers are sometimes lucky enough to receive down payment help from caring parents and other family members who may be eager to help get them in their own home. Your family members may be happy at the chance to help you reach the goal of having your first home.

Contact housing finance agencies. These types of agencies offer provisional loan programs to moderate and low income buyers, buyers with an interest in sprucing up a house within a particular part of the city, and other particular types of buyers as specified by the finance agency. Financing through a housing finance agency, you may get an interest rate that is below market, down payment assistance and other incentives. These types of agencies may assist eligible homebuyers with a lower rate of interest, help with your down payment, and provide other advantages. The primary mission of non-profit housing finance agencies is build up the purchase of homes in specific places.

Research no-down and low-down mortgages.

• 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 individuals qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for financing. Down payment sums for FHA mortgages are smaller than those with conventional mortgage loans, although these loans have average interest rates. Closing costs can be financed in the mortgage, and your down payment may be as low as 3% of the total amount.

• VA mortgage loans

  VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a competitive rate of interest, no down payment, and reduced closing costs. Although the loans don't originate from the VA, the department certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. Generally the piggyback loan takes care of 10 percent of the purchase price, while the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, rather than needing to put together the typical 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller commits to lend you a portion of his home equity to help you get your down payment funds. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Generally, this kind of second mortgage will have higher interest.

Want to discuss the best options for down payments? Give us a call at 866-300-1550.