Putting Together Your Down Payment

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Lots of borrowers can qualify for several different kinds of mortgages, but they don't have a lot of money to put up a down payment. Below are a few methods that will help you put together your down payment

Slash your budget and build up savings. Scrutinize your budget to find extra money to go toward your down payment. There are bank programs in which a specific portion of your take-home pay is automatically transferred into a savings account every pay period. Some practical methods to put together funds include moving into less expensive housing, and skipping a year's vacation.

Work more and sell things you don't need. Look for a second job. This can be exhausting, but the temporary trial can help you get your down payment. You can also get creative about the items you may be able to put up for sale. You might have desirable items you can sell on an online auction, or quality household items for a garage or tag sale. Also, you might want to consider selling any investments you hold.

Tap into your retirement funds. Explore the specifics of your individual plan. You can take out funds from a 401(k) for a down payment or make a withdrawal from an Individual Retirement Account. Be sure you understand about any penalties, the effect this could have on taxes, and repayment terms.

Ask for help from generous members of your family. Many homebuyers sometimes receive help with their down payment help from thoughtful parents and other family members who are able to help them get into their first home. Your family members may be pleased to help you reach the goal of owning your own home.

Research housing finance agencies. These agencies extend provisional loan programs to moderate and low income borrowers, buyers interested in sprucing up a residence in a particular part of the city, and additional groups as defined by each finance agency. Financing with this type of agency, you probably will get a below market interest rate, down payment assistance and other advantages. Housing finance agencies can help eligible homebuyers with a lower rate of interest, get you your down payment, and provide other benefits. These non-profit agencies to boost the value of homes in certain areas.

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

  • Federal Housing Administration (FHA) mortgages

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low to 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 provides mortgage insurance to the private lenders, ensuring the buyers are eligible for a loan. Interest rates for an FHA mortgage are usually the going interest rate, while the down payment with an FHA loan are lower than those of conventional loans. The down payment may be as low as three percent while the closing costs might be covered by the mortgage.

  • VA mortgages

    With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterans and service people. This particular loan does not require a down payment, has limited closing costs, and provides a competitive rate of interest. While the mortgages don't originate from the VA, the office verifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    You may finance your down payment using a second mortgage that closes at the same time as the first. Most of the time, the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. Instead of the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" agreement, the seller agrees to loan you a portion of his own equity to help you with your down payment money. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Usually you will pay a somewhat higher interest rate on the loan financed by the seller.

No matter your method of getting together down payment funds, the thrill of owning your own home will be just as sweet!

Want to discuss your down payment? Give us a call at (561) 329-0075.