Building Your Down Payment

Many buyers qualify for various loan programs, but they can't afford a large down payment. Want to buy a new house, but don't know how to get together your down payment?

Reduce expenses and save. Turn your budget upside-down to discover ways you can cut expenses to save for your down payment. There are bank programs through which a portion of your take-home pay is automatically transferred into savings every pay period. Some effective methods to build up funds include moving into housing that is less expensive, and staying home for your family vacation this year.

Sell things you do not really need and get a second job. Perhaps you can find an additional job to get your down payment money. Additionally, you can put together a comprehensive inventory of things you can sell. Unused gold jewelry can bring a good price from local jewelry stores. Multiple small items might add up to a fair amount at a garage or tag sale. You can also look into what your investments could sell for.

Tap into retirement funds. Check the provisions of your particular program. Many people get down payment money by withdrawing funds from their IRAs or pulling money out of their 401(k) programs. Make sure to find out about the tax consequences, your obligation for repayment, and possible early withdrawal penalties.

Ask for a generous gift from family. Many homebuyers somtimes get help with their down payment assistance from giving parents and other family members who may be prepared to help them get into their first home. Your family members may be happy at the chance to help you reach the milestone of having your first home.

Research housing finance agencies. Special loan programs are offered to buyers in certain situations, like low income buyers or future homeowners planning to remodel homes in a particular part of town, among others. With the help of this type of agency, you may receive a below market interest rate, down payment assistance and other benefits. These types of agencies may help eligible homebuyers with a reduced rate of interest, get you your down payment, and offer other benefits. These non-profit agencies exist to boost home ownership in particular areas.

Research no-down and low-down mortgage loan programs.

• FHA loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low to moderate-income individuals get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who would not be able to qualify for a typical mortgage by themselves, by providing mortgage insurance to the lenders. Interest rates for an FHA loan are typically the current interest rate, but the down payment requirements with an FHA loan are below those of conventional loans. The down payment may be as low as 3 percent while the closing costs can be financed in the mortgage.

• VA mortgages

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can get a VA loan, which generally offers a reasonable rate of interest, no down payment, and minimal closing costs. While the loans don't originate from the VA, the department verfifies applicants by providing eligibility certificates.

• Piggy-back loans

  You may fund your down payment through a second mortgage that closes along with the first. Generally the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage finances 80 percent. Rather than the traditional 20 percent down payment, the buyer 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 portion of his own equity to help you get your down payment money. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Typically, this kind of second mortgage has higher interest.

No matter your method of getting together your down payment funds, the satisfaction of living in your own home will be just as great!

Want to discuss down payment options? Give us a call: 3149139678.