Your Down Payment

Lots of folks who are looking to purchase a new home can qualify for various loan programs, but they can't afford a large down payment. Here are a few tips:

Tighten your belt and save. Look for ways to reduce your monthly expenditures to set aside funds for a down payment. Also, you can look into bank programs through which a portion of your take-home pay is automatically deposited into a savings account every pay period. You could look into some big expenses in your spending history that you can do without, or trim, at least temporarily. For example, you might move into less expensive housing, or skip a family vacation.

Work more and sell things you don't need. Try to find a second job. This can be rough, but the temporary difficulty can provide your down payment money. You can also seriously consider the possessions you really need and the things you migh be able to put up for sale. You may own collectibles you can put up for sale on an online auction, or quality household items for a tag or garage sale. Also, you might want to think about selling any investments you hold.

Borrow your down payment from your retirement plan. Explore the details for your particular plan. You may pull out funds from a 401(k) for a down payment or withdraw from an IRA. Make sure you understand the tax consequences, repayment terms, and any penalties for withdrawing early.

Ask for a gift from your family. Many homebuyers are often fortunate enough to get down payment assistance from gracious parents and other family members who are anxious to help get them in their own home. Your family members may be eager to help you reach the milestone of having your own home.

Contact housing finance agencies. These agencies offer provisional loan programs for moderate and low income buyers, buyers with an interest in rehabilitating a house in a targeted part of the city, and additional groups as defined by each finance agency. Financing through this type of agency, you probably will be given a below market interest rate, down payment help and other benefits. Housing finance agencies can assist eligible homebuyers with a lower rate of interest, help with your down payment, and provide other assistance. The main goal of not-for-profit housing finance agencies is promoting residence ownership in certain areas.

Find out about low-down and no-down mortgage loans.

• FHA mortgage loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a vital role in aiding low to moderate-income Americans get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who would not be eligible for a typical mortgage loan by themselves, by providing mortgage insurance to the private lenders. Interest rates with an FHA mortgage normally feature the market interest rate, but the down payment amounts with an FHA loan will be lower than those of conventional loans. Closing costs can be financed in the mortgage, and the down payment could be as low as 3 percent of the purchase price.

• VA mortgage loans

  With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This special loan does not require a down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. While the VA does not actually provide the mortgage loans, it does certify eligibility to qualify for a VA loan.

• Piggy-back loans

  You may finance your down payment with a second mortgage that closes at the same time as the first. Usually the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. The borrower pays the remaining 10%, instead of come up with the usual 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to loan you some of his home equity to help you with your down payment money. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually this form of second mortgage has a higher rate of interest.

Need to talk about down payments? Call us at 3149139678.