Putting Together Your Down Payment

Many borrowers can qualify for a loan, but they can't afford a large down payment. Do you want to look into getting a new home, but don't know how to get together your down payment?

Slash the budget and build up savings. Be on the look-out for ways you can reduce your expenditures to put away money for a down payment. You could also try enrolling in an automatic savings plan to automatically have a set portion of your paycheck deposited into your savings account. Some practical strategies to build up funds include moving into a residence that is less expensive, and skipping your family vacation for a year or two.

Work more and sell things you don't need. Try to get a second job. This can be exhausting, but the temporary trial 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 might add up to a nice sum at a garage or tag sale. You could also research what your investments could sell for.

Tap into your retirement funds. Check the provisions of your specific program. It is possible to take out funds from a 401(k) for you down payment or make a withdrawal from an IRA. You will want to make sure you understand about any penalties, the way this will affect on taxes, and repayment obligation.

Ask for a gift from your family. Many buyers are often lucky enough to receive help with their down payment assistance from thoughtful parents and other family members who may be willing to help them get into their first home. Your family members may be willing to help you reach the milestone of buying your first home.

Research housing finance agencies. These agencies provide special mortgate loan programs- for low and moderate-income buyers, buyers interested in sprucing up a residence within a targeted part of the city, and other groups as defined by each agency. Financing through this type of agency, you probably will receive an interest rate that is below market, down payment assistance and other incentives. Housing finance agencies may help you with a reduced rate of interest, get you your down payment, and provide other advantages. These non-profit agencies were established to boost home ownership in particular places.

Find out about low-down and no-down mortgage loan programs.

• FHA mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low to moderate-income families qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, enabling new homebuyers who might not qualify for a conventional mortgage, to obtain home financing. Interest rates with an FHA mortgage typically feature the going interest rate, but the down payment amounts with an FHA loan are lower than those of conventional loans. Closing costs can be financed within the mortgage, while your down payment may be as low as 3% of the total.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan does not require a down payment, has mimimal closing costs, and offers a competitive rate of interest. While the VA doesn't provide the mortgages, it does issue a certificate of eligibility to qualify for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close along with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage covers 80 percent. Instead of the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In the option of a seller "carrying back a second mortgage," the seller loans you part of his or her equity. The buyer funds the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Often, this form of second mortgage has a higher rate of interest.

The feeling of accomplishment will be the same, no matter which approach you use to come up with the down payment. Your new home will be well worth it!

Want to discuss down payments? Give us a call at 4078987559.