Putting Together Your Down Payment

Lots of buyers can easily qualify for a loan, but they don't have much to put up the standard down payment. Do you want to buy a new house, but don't know how you should get together a down payment?

Cut expenses and save. Turn your budget upside-down to find ways you can cut expenses to go toward your down payment. You might also try enrolling in an automatic savings plan at your bank to have a percentage of your payroll automatically moved into your savings account. You might look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay local for your vacation.

Sell things you don't need and get a second job. Look for a second job. This can be rough, but the temporary trial can help you get your down payment. You can also get creative about the items you can sell. You might own desirable items you can sell on an auction website, or quality household goods for a garage or tag sale. Also, you might want to look into selling any investments you own.

Borrow from a retirement plan. Research the details for your particular plan. You can pull out funds from a 401(k) for a down payment or perform a withdrawal from an Individual Retirement Account. Be sure you understand the tax consequences, repayment terms, and penalties for withdrawing early.

Ask for help from generous members of your family. Many homebuyers somtimes get help with their down payment help from thoughtful parents and other family members who may be prepared to help get them in their own home. Your family members may be willing to help you reach the goal of buying your first home.

Contact housing finance agencies. Provisional loan programs are offered to homebuyers in specific situations, such as low income purchasers or people looking to remodel homes in a certain place, among others. Working with a housing finance agency, you probably will receive a below market interest rate, down payment help and other benefits. These kinds of agencies can help you with a reduced interest rate, help with your down payment, and offer other advantages. The main mission of non-profit housing finance agencies is to boost the purchase of homes in targeted parts of the city.

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

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in aiding low to moderate-income buyers get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to qualify for home financing. FHA helps first-time buyers and others who might not be able to qualify for a conventional mortgage on their own, by providing mortgage insurance to the private lenders. Down payment sums for FHA loans are less than those with traditional mortgage loans, although these mortgages hold current rates of interest. The down payment may go as low as 3 percent and the closing costs can be financed in the mortgage.

• VA mortgages

  VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a reasonable fixed rate of interest, no down payment, and minimal closing costs. While it's true that the loans don't originate from the VA, the office verfifies applicants by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. Usually the piggyback loan takes care of 10 percent of the home's amount, and the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, instead of having to pull together the typical 20% down payment.

• Carry-Back loans

  We a seller carries back a second mortgage, the seller loans you part of his or her equity. You would borrow the majority of the purchase price from a traditional mortgage lending institution and finance the remainder with the seller. Often, this kind of second mortgage will have a higher rate of interest.

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