Putting Together Your Down Payment

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

Slash the budget and build up savings. Scrutinize the budget to uncover extra money to save for your down payment. There are bank programs through which a specific portion of your paycheck is automatically transferred into savings each pay period. Some practical ways to put together funds include moving into a residence that is less expensive, and staying local for your vacation this year.

Work more and sell things you do not need. Perhaps you can find a second job and build up your earnings. In addition, you can make an exhaustive list of things you may be able to sell. Unused gold jewelry can bring a good amount from local jewelry stores. Multiple small things may add up to a fair amount at a garage or tag sale. You can also look into what your investments will sell for.

Borrow money from your retirement plan. Research the details of your particular plan. It is possible to borrow money from a 401(k) for a down payment or perform a withdrawal from an IRA. Make sure you know about any penalties, the effect this may have on taxes, and repayment terms.

Ask for help from generous family members. Many homebuyers are often fortunate enough to get help with their down payment assistance from giving parents and other family members who are anxious to help them get into their own home. Your family members may be inclined to help you reach the milestone of buying your first home.

Contact housing finance agencies. Special mortgage loans are offered to homebuyers in certain situations, such as low income homebuyers or people looking to improve homes in a certain place, among others. With the help of a housing finance agency, you probably will get an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies can assist you with a lower rate of interest, help with your down payment, and offer other assistance. The principal purpose of not-for-profit housing finance agencies is to promote the purchase of homes in particular parts of the city.

Research no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in aiding low and moderate-income buyers get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who would not be eligible for a typical loan by themselves, by offering mortgage insurance to private lenders. Down payment totals for FHA loans are below those with typical mortgages, although these loans hold current interest rates. The required down payment may go as low as 3 percent and the closing costs may be covered by the mortgage.

• VA mortgages

  VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which generally offers a low fixed rate of interest, no down payment, and minimal closing costs. Although the loans aren't actually issued by the VA, the office verfifies applicants by issuing eligibility certificates.

• Piggy-back loans

  You may fund your down payment using 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, and the first mortgage covers 80 percent. The borrower pays the remaining 10%, rather than come up with the typical 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to loan you a piece of his own equity to help you get your down payment funds. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Usually you will pay a slightly higher rate on the loan from the seller.

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

Want to discuss the best options for down payments? Give us a call: 3149139678.