Building Your Down Payment

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Lots of buyers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Below are a few ways to put together a down payment

Slash your budget and build up savings. Look for ways you can trim your monthly expenditures to save toward a down payment. There are bank programs in which a portion of your take-home pay is automatically deposited into a savings account each pay period. You would be wise to look into some big expenses in your budget that you can do without, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay close to home for your family vacation.

Work more and sell things you don't need. Try to find an additional job. This can be rough, but the temporary trial can help you get your down payment. Additionally, you can make an exhaustive inventory of items you can sell. Broken gold jewelry can bring a good price from local jewelry stores. A closetful of small items could add up to a fair amount at a garage or tag sale. Also, you might want to think about selling any investments you hold.

Borrow funds from your retirement plan. Research the specifics of your individual plan. It is possible to borrow money from a 401(k) for a down payment or perform a withdrawal from an IRA. You will need to make sure you understand about any penalties, the way this could affect on taxes, and repayment obligation.

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

Contact housing finance agencies. Provisional loan programs are provided to buyers in certain circumstances, like low income homebuyers or future homeowners planning to renovating homes in a targeted place, among others. Working with this kind of agency, you can be given a below market interest rate, down payment help and other advantages. Housing finance agencies may assist eligible buyers with a reduced interest rate, help with your down payment, and offer other assistance. These non-profit agencies exist to build up community in particular areas.

Research no-down and low-down mortgages.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in assisting low to moderate-income Americans get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who wish to qualify for home financing. FHA provides mortgage insurance to private lenders, helping the buyers to become eligible for a loan. Interest rates with an FHA mortgage are normally the current interest rate, but the down payment for an FHA mortgage are lower than those of conventional loans. The down payment can be as low as 3 percent while the closing costs might be covered by the mortgage loan.

• VA mortgages

  VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which usually offers a competitive rate of interest, no down payment, and limited closing costs. Even though the loans don't originate from the VA, the office certifies applicants by issuing eligibility certificates.

• Piggy-back loans

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

• Carry-Back loans

  We a seller carries back a second mortgage, the seller loans you part of his or her home equity. In this scenario, you would borrow the largest portion of the purchase price from a traditional mortgage lender and finance the remaining amount with the seller. Usually this form of second mortgage will have higher interest.

No matter how you gather down payment funds, the thrill of owning your own home will be just as great!

Want to discuss down payment options? Call us: (561) 329-0075.