Building Your Down Payment

Many buyers qualify for several different kinds of mortgages, but they can't afford a large down payment. We have a few suggestions

Cut expenses and save. Turn your budget upside-down to find ways you can cut expenses to save for your down payment. You might also decide to enroll in an automatic savings plan to automatically have a predetermined portion of your take-home pay transferred into your savings account. You might look into some big expenses in your budget that you can live without, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay local for your annual vacation.

Sell items you don't really need and find a second job. Maybe you can find a second job and build up your earnings. Additionally, you can make a comprehensive list of items you may be able to sell. Unworn gold jewelry can be sold at local jewelers. Multiple small things might add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Borrow from retirement funds. Research the details of your individual plan. It is possible to borrow money from a 401(k) for a down payment or perform a withdrawal from an IRA. Make sure to find out about the tax ramifications, repayment terms, and early withdrawal penalties.

Ask for help from family members. First-time homebuyers somtimes get help with their down payment assistance from caring family members who may be able to help get them in their first home. Your family members may be eager to help you reach the goal of buying your own home.

Learn about housing finance agencies. These types of agencies extend provisional mortgate loan programs to low and moderate-income buyers, buyers interested in renovating a home within a specific part of the city, and additional groups as defined by the finance agency. Financing through a housing finance agency, you may receive an interest rate that is below market, down payment help and other benefits. These types of agencies can help you with a reduced interest rate, get you your down payment, and offer other assistance. The primary goal of non-profit housing finance agencies is promoting residential ownership in targeted areas.

Find out about low-down and no-down mortgage loans.

• FHA mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low to moderate-income Americans qualify for mortgage loans. 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 the private lenders, helping the buyers to become eligible for a home loan. Down payment totals for FHA loans are lower than those of conventional mortgage loans, although these loans hold average rates of interest. Closing costs can be financed within the mortgage, while the down payment could be as low as 3 percent of the purchase price.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This particular loan does not require a down payment, has reduced closing costs, and offers a competitive interest rate. Although the VA does not actually issue the mortgage loans, it does certify eligibility to apply for a VA mortgage.

• Piggy-back loans

  You may finance your down payment using a second mortgage that closes with the first. Usually the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, rather than putting the usual 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to loan you some of his own equity to help you get your down payment funds. You would borrow the largest portion of the purchase price from a traditional mortgage lending institution and borrow the remaining amount from the seller. Usually you'll pay a slightly higher rate on the loan from the seller.

Need to talk about your down payment? Give us a call at 9722039033.