Building Your Down Payment

Many folks who are looking to purchase a new house can qualify for various loan programs, but they don't have a lot of cash 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?

Slash the budget and build up savings. Look for ways to trim your monthly expenses to put away money for a down payment. There are bank programs in which some of your take-home pay is automatically placed into savings every pay period. You might look into some big expenses in your spending history that you can give up, or trim, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a vacation.

Sell items you do not really need and get a second job. Perhaps you can find an additional job to get your down payment money. In addition, you can put together a comprehensive list of things you can sell. Unworn gold jewelry can be sold at local jewelers. Maybe you have desirable items you can put up for sale on an online auction, or quality household goods for a garage or tag sale. You could also research what your investments may bring if sold.

Borrow from your retirement funds. Investigate the parameters of your specific plan. You can take out funds from a 401(k) for you down payment or perform a withdrawal from an IRA. Make sure you understand about any penalties, the way this will affect on your taxes, and repayment obligation.

Request a generous gift from family. First-time homebuyers somtimes receive down payment help from caring family members who are prepared to help get them in their first home. Your family members may be inclined to help you reach the goal of owning your own home.

Research housing finance agencies. Special mortgage programs are given to buyers in specific situations, such as low income homebuyers or buyers looking to improve homes in a certain area, among others. Financing through a housing finance agency, you may be given an interest rate that is below market, down payment assistance and other incentives. These types of agencies can help eligible homebuyers with a reduced rate of interest, help with your down payment, and provide other advantages. The principal purpose of not-for-profit housing finance agencies is to promote residence ownership in specific places.

Explore no-down and low-down mortgage loans.

• FHA loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income individuals qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to qualify for home financing. FHA helps first-time homebuyers and others who would not be eligible for a traditional loan on their own, by offering mortgage insurance to private lenders. Down payment amounts for FHA mortgages are less than those for traditional mortgage loans, even though these mortgages hold current rates of interest. The down payment may be as low as three percent while the closing costs might be packaged in the mortgage.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This particular loan requires no down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. Even though the VA doesn't finance the mortgage loans, it does certify eligibility to qualify for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. Generally the piggyback loan takes care of 10 percent of the home's price, while the first mortgage covers 80 percent. The borrower covers the remaining 10%, instead of needing to pull together the usual 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to lend you some of his own equity to assist you with your down payment money. You would finance the largest portion of the purchase price with a traditional lender and finance the remainder with the seller. Usually you'll pay a somewhat higher interest rate on the loan from the seller.

No matter your strategy of pulling together your down payment, the thrill of living in your own home will be just as sweet!

Need to talk about down payments? Call us at 9722039033.