Putting Together Your Down Payment

Lots of borrowers qualify for several different kinds of mortgages, but they don't have much to pay the standard down payment. Do you want to look into getting a new house, but don't know how you should put together your down payment?

Cut expenses and save. Be on the look-out for ways to trim your expenditures to save toward a down payment. You could also decide to enroll in an automatic savings plan to have a portion of your payroll automatically transferred into savings. You could look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or skip a family vacation.

Work a second job and sell things you do not need. Perhaps you can get an additional job to get your down payment money. You can also seriously consider the possessions you really need and the items you migh be able to put up for sale. Maybe you have collectibles you can sell on an online auction, or household goods for a tag or garage sale. Also, you can look into selling any investments you hold.

Borrow from retirement funds. Investigate the parameters of your retirement plan. You can borrow money from a 401(k) for you down payment or withdraw from an IRA. Make sure to learn about the tax ramifications, your obligation for repayment, and possible penalties for withdrawing early.

Ask for help from members of your family. Many buyers are sometimes fortunate enough to receive down payment help from giving parents and other family members who are able to help get them in their first home. Your family members may be inclined to help you reach the milestone of having your first home.

Contact housing finance agencies. Special mortgage loans are provided to homebuyers in certain circumstances, like low income purchasers or buyers looking to remodel homes in a particular area, among others. With the help of this type of agency, you may be given a below market interest rate, down payment assistance and other benefits. Housing finance agencies may help you with a lower interest rate, get you your down payment, and provide other advantages. The primary goal of not-for-profit housing finance agencies is promoting the purchase of homes in particular places.

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

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income buyers get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who would not be eligible for a typical mortgage on their own, by providing mortgage insurance to the lenders. Interest rates with an FHA loan generally feature the going interest rate, but the down payment for an FHA loan are below those of conventional loans. The down payment can be as low as three percent and the closing costs might be financed in the mortgage loan.

• VA mortgage loans

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

• Piggy-back loans

  You may finance your down payment through a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan is for 10 percent of the home's price, while the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" situation, the seller agrees to lend you some of his home equity to assist you with your down payment funds. You would finance the largest portion of the purchase price with a traditional lending institution and finance the remainder with the seller. Usually you'll pay a somewhat higher interest rate with the loan financed by the seller.

No matter your method of getting together your down payment, the satisfaction of reaching the goal of owning your own home will be just as sweet!

Need to talk about your down payment? Call us at 9722039033.