Building Your Down Payment

Many borrowers qualify for a loan, but they can't afford a large down payment. Below are a few straightforward methods that will help you put together a down payment

Slash the budget and build up savings. Scrutinize your budget to discover ways you can cut expenses to save for your down payment. Also, you can look into bank programs through which some of your paycheck is automatically transferred into savings every pay period. You could look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you might move into less expensive housing, or stay close to home for your annual vacation.

Sell items you don't need and find a second job. Maybe you can find a second job to get your down payment money. You can also get creative about the items you can sell. Maybe you own desirable items you can sell at an auction website, or quality household goods for a garage or tag sale. You can also explore what any investments you have may sell for.

Borrow from retirement funds. Investigate the parameters of your retirement program. Some people get down payment money by withdrawing what they need from IRAs or getting money out of their 401(k) plans. You will want to ensure you are clear about any penalties, the way this may affect on your income taxes, and repayment terms.

Ask for help from members of your family. Many buyers are often fortunate enough to receive help with their down payment help from gracious parents and other family members who are eager to help get them in their own home. Your family members may be eager to help you reach the goal of owning your first home.

Research housing finance agencies. Special mortgate loan programs are offered to buyers in certain circumstances, such as low income purchasers or future homeowners planning to renovating homes in a targeted area, among others. With the help of a housing finance agency, you may get an interest rate that is below market, down payment help and other advantages. These kinds of agencies can help you with a lower interest rate, help with your down payment, and offer other assistance. The central goal of non-profit housing finance agencies is to promote the purchase of homes in specific areas.

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

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income Americans qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, enabling buyers who will not be eligible for a typical loan, to obtain a mortgage. Interest rates with an FHA mortgage are normally the going interest rate, but the down payment with an FHA mortgage are lower than those of conventional loans. Closing costs might be included in the mortgage, while the down payment can be as low as 3% of the total.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This particular loan requires no down payment, has reduced closing costs, and provides the benefit of a competitive interest rate. Even though the VA doesn't actually provide the mortgage loans, it does issue a certificate of eligibility to qualify for a VA loan.

• Piggy-back loans

  You can finance a down payment through a second mortgage that closes at the same time as the first. Generally the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than come up with the usual 20% down payment.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. You would finance the largest portion of the purchase price with a traditional mortgage lender and borrow the remainder from the seller. Often, this kind of second mortgage will have a higher rate of interest.

No matter your method of getting together your down payment, the satisfaction of living in your own home will be just as great!

Want to discuss the best options for down payments? Call us at 9722039033.