Your Down Payment

Lots of borrowers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Here are a few ideas:

Tighten your belt and save. Scrutinize the budget to uncover extra money to save for your down payment. Also, you can look into bank programs through which a specific portion of your paycheck is automatically placed into a savings account each pay period. You could look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay close to home for your family vacation.

Work more and sell things you do not need. Look for an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also seriously consider the possessions you actually need and the things you can put up for sale. Maybe you own desirable items you can sell at an auction website, or household goods for a garage or tag sale. Also, you might want to consider selling any investments you hold.

Borrow your down payment from a retirement plan. Check the parameters of your specific program. Many people get down payment money from withdrawing funds from their IRAs or taking funds out of their 401(k) programs. You will need to ensure you are knowledgable about any penalties, the effect this will have on your income taxes, and repayment terms.

Request a gift from your family. Many buyers somtimes get help with their down payment help from gracious family members who may be willing to help them get into their own home. Your family members may be willing to help you reach the milestone of owning your first home.

Research housing finance agencies. Provisional mortgage loans are extended to buyers in specific circumstances, such as low income purchasers or buyers planning to renovating houses in a specific neighborhood, among others. Financing through this type of agency, you may receive an interest rate that is below market, down payment assistance and other perks. Housing finance agencies may assist eligible homebuyers with a lower rate of interest, get you your down payment, and offer other benefits. The primary purpose of not-for-profit housing finance agencies is to boost the purchase of homes in particular places.

Find out about low-down and no-down mortgage loan programs.

• FHA mortgage loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low and moderate-income individuals qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, enabling new homebuyers who may not be eligible for a conventional loan, to get financing. Interest rates with an FHA mortgage generally feature the current interest rate, but the down payment for an FHA mortgage are less than those of conventional loans. Closing costs can be covered by the mortgage, and the down payment can be as low as 3% of the total amount.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan does not require a down payment, has mimimal closing costs, and provides the advantage of a competitive rate of interest. While the mortgage loans are not actually issued by the VA, the office certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Usually the piggyback loan is for 10 percent of the purchase price, and the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, instead of putting the typical 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller commits to lend you a portion of his home equity to help you get your down payment funds. In this scenario, you would borrow the largest portion of the purchase price from a traditional mortgage lending institution and finance the remainder with the seller. Typically you will pay a somewhat higher interest rate with the loan from the seller.

Want to discuss the best options for down payments? Give us a call: 2147390569.