Building Your Down Payment

Many buyers qualify for a loan, but they don't have a lot of money to put up a down payment. We have a few ideas

Tighten your belt and save. Be on the look-out for ways to trim your expenditures to save toward a down payment. You could also try enrolling in an automatic savings plan at your bank to have a percentage of your payroll automatically moved into savings. You would be wise to look into some big expenses in your spending history that you can give up, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or skip a vacation.

Work more and sell things you do not need. Perhaps 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 things you can put up for sale. You may own collectibles you can sell on an online auction, or household goods for a tag or garage sale. Also, you can look into selling any investments you hold.

Borrow funds from your retirement plan. Check the parameters of your particular program. Some homebuyers get down payment money by withdrawing from Individual Retirement Accounts or getting money out of 401(k) plans. You will need to ensure you are clear about any penalties, the way this may affect on income taxes, and repayment obligation.

Ask for a generous gift from your family. Many buyers are often fortunate enough to receive help with their down payment assistance from giving family members who are anxious to help them get into their first home. Your family members may be happy at the chance to help you reach the milestone of owning your own home.

Research housing finance agencies. Special mortgate loan programs are provided to homebuyers in specific circumstances, such as low income buyers or buyers looking to remodel homes in a certain neighborhood, among others. Financing through a housing finance agency, you may be given an interest rate that is below market, down payment help and other benefits. Housing finance agencies can help eligible buyers with a lower interest rate, get you your down payment, and provide other advantages. These non-profit agencies exist to promote community in particular areas.

Find out about low-down and no-down mortgages.

• FHA mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in helping low and moderate-income families get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for a mortgage. Down payment requirements for FHA mortgages are less than those with conventional mortgage loans, even though these mortgages hold average rates of interest. Closing costs might be included in the mortgage, while your down payment could be as low as 3% of the purchase price.

• VA mortgage loans

  VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a competitive fixed interest rate, no down payment, and limited closing costs. Although the loans aren't actually financed by the VA, the department certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes along with the first. Usually the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. Rather than the usual 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

• Carry-Back loans

  In the option of the seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. You would finance the majority of the purchase price with a traditional mortgage lending institution and finance the remaining amount with the seller. Typically you'll pay a slightly higher interest rate with the loan from the seller.

No matter your strategy of getting together your down payment, the thrill of owning your own home will be just as sweet!

Want to discuss your down payment? Give us a call: 9722039033.