Your Down Payment

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Many borrowers can easily qualify for various loan programs, but they don't have a lot of cash to pay a down payment. We have a few ideas

Tighten your belt and save. Turn your budget inside out to uncover extra money to save for your down payment. There are bank programs through which some of your paycheck is automatically transferred into savings each pay period. You might look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay close to home for your annual vacation.

Work a second job and sell things you don't need. Maybe you can get an additional job and save your earnings. In addition, you can make a comprehensive inventory of items you can sell. Unused gold jewelry can bring a good amount from local jewelers. Maybe you own collectibles you can put up for sale on an online auction, or household items for a tag or garage sale. Also, you can think about selling any investments you own.

Borrow from your retirement plan. Explore the specifics of your particular plan. You may take out money from a 401(k) plan for a down payment or withdraw from an IRA. Make sure you understand about any penalties, the way this could affect on your income taxes, and repayment terms.

Ask for a gift from your family. Many buyers somtimes receive down payment assistance from giving parents and other family members who may be anxious to help them get into their first home. Your family members may be eager to help you reach the milestone of buying your own home.

Research housing finance agencies. Special loan programs are provided to homebuyers in certain situations, like low income purchasers or homebuyers planning to improve homes in a certain area, among others. With the help of a housing finance agency, you can get a below market interest rate, down payment assistance and other perks. These kinds of agencies may assist you with a lower rate of interest, help with your down payment, and provide other benefits. These non-profit programs were established to boost the value of homes in particular areas.

Explore no-down and low-down mortgage loans.

• FHA loans

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low to moderate-income buyers qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to get home financing. FHA provides mortgage insurance to private lenders, enabling homebuyers who will not be eligible for a conventional loan, to receive a mortgage. Down payment amounts for FHA loans are below those of traditional mortgage loans, although these loans have current rates of interest. The down payment can go as low as 3 percent while the closing costs could be covered by the mortgage.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan requires no down payment, has mimimal closing costs, and provides the benefit of a competitive rate of interest. Although the VA doesn't finance the mortgage loans, it does certify eligibility to apply for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Often the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. Instead of the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to loan you a piece of his home equity to help you get your down payment funds. The buyer funds the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a somewhat higher rate with the loan financed by the seller.

No matter your method of pulling together down payment money, the satisfaction of reaching the goal of living in your own home will be just as sweet!

Want to discuss down payments? Give us a call: 314-628-2218.