Putting Together Your Down Payment

Many people who would like to purchase a new home can qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to look into getting a new home, but aren't sure how you should get together a down payment?

Slash your budget and build up savings. Be on the look-out for ways you can trim your monthly expenditures to set aside money for a down payment. There are bank programs in which some of your paycheck is automatically placed into savings every pay period. You might look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you may move into less expensive housing, or stay close to home for your annual vacation.

Work more and sell items you do not need. Try to get a second job. This can be rough, but the temporary trial can provide your down payment money. In addition, you can put together a comprehensive inventory of things you may be able to sell. Unworn gold jewelry can be sold at local jewelry stores. A closetful of small things might add up to a nice sum at a garage or tag sale. You can also look into what your investments may sell for.

Borrow from a retirement plan. Research the specifics of your particular plan. Many people get down payment money from withdrawing from their IRAs or taking money out of 401(k) programs. Be sure to learn about the tax consequences, repayment terms, and any penalties for withdrawing early.

Ask for help from members of your family. Many buyers somtimes get down payment assistance from caring family members who are anxious to help get them in their own home. Your family members may be pleased at the chance to help you reach the milestone of having your own home.

Research housing finance agencies. These types of agencies offer provisional mortgate loan programs- for low and moderate-income buyers, buyers interested in renovating a house within a specific part of the city, and additional groups as specified by each finance agency. With the help of a housing finance agency, you may be given an interest rate that is below market, down payment help and other advantages. These kinds of agencies can help you with a reduced interest rate, get you your down payment, and offer other assistance. The central mission of not-for-profit housing finance agencies is boosting the purchase of homes in certain places.

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

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in assisting low to moderate-income Americans get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time buyers and others who might not be eligible for a typical mortgage loan by themselves, by offering mortgage insurance to private lenders. Down payment totals for FHA loans are lower than those for typical mortgage loans, although these mortgages have current rates of interest. The required down payment may go as low as 3 percent while the closing costs might be covered by the mortgage loan.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan does not require a down payment, has mimimal closing costs, and offers a competitive rate of interest. While the VA doesn't actually provide the mortgage loans, it does certify eligibility to qualify for a VA loan.

• Piggy-back loans

  You can finance your down payment through a second mortgage that closes at the same time as the first. Usually the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage covers 80 percent. The borrower pays the remaining 10%, instead of needing to pull together the usual 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to loan you part of his home equity to help you get your down payment money. You would borrow the largest portion of the purchase price from a traditional mortgage lender and finance the remainder with the seller. Usually you'll pay a slightly higher interest rate with the loan financed by the seller.

No matter how you gather your down payment, the satisfaction of reaching the goal of owning your own home will be just as great!

Want to discuss the best options for down payments? Give us a call: 9722039033.