Building Your Down Payment

Lots of borrowers can qualify for various loan programs, but they don't have a lot of money to put up the standard down payment. Here are a few tips:

Tighten your belt and save. Look for ways you can trim your monthly expenditures to put away money for a down payment. You could also try enrolling in an automatic savings plan to automatically have a predetermined portion of your take-home pay deposited into savings. You could look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. For example, you may move into less expensive housing, or stay local for your annual vacation.

Work more and sell things you do not need. Maybe you can find an additional job and save your earnings. Additionally, you can put together a comprehensive inventory of things you can sell. Unused gold jewelry can bring a good amount from local jewelry stores. Maybe you own desirable items you can sell at an online auction, or household items for a tag or garage sale. Also, you can consider selling any investments you own.

Borrow money from a retirement plan. Explore the details for your particular plan. Some people get down payment money by withdrawing from Individual Retirement Accounts or borrowing from their 401(k) plans. Make sure you are clear about any penalties, the effect this will have on taxes, and repayment obligation.

Ask for a generous gift from your family. First-time buyers are often lucky enough to get help with their down payment assistance from caring parents and other family members who are willing to help them get into their first home. Your family members may be pleased to help you reach the milestone of having your first home.

Learn about housing finance agencies. Provisional mortgage loans are offered to buyers in certain situations, such as low income homebuyers or buyers looking to remodel houses in a particular area, among others. With the help of this kind of agency, you may get a below market interest rate, down payment assistance and other advantages. These kinds of agencies may assist you with a lower interest rate, help with your down payment, and offer other assistance. These non-profit programs to boost the value of homes in specific areas.

Learn about low-down and no-down mortgages.

• FHA mortgage loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income Americans get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to qualify for mortgages. FHA assists first-time buyers and others who would not be able to qualify for a traditional mortgage by themselves, by offering mortgage insurance to lenders. Down payment amounts for FHA loans are lower than those of traditional mortgages, even though these mortgages hold average rates of interest. Closing costs can be included in the mortgage, and your down payment can be as low as 3% of the total.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan requires no down payment, has reduced closing costs, and offers a competitive rate of interest. Although the VA does not actually finance the mortgages, it does certify eligibility to apply for a VA loan.

• Piggy-back loans

  You may finance a down payment with a second mortgage that closes with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's amount, and the first mortgage covers 80 percent. The homebuyer pays the remaining 10%, rather than putting 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 finance the largest portion of the purchase price with a traditional lending institution and borrow the remainder from the seller. Often, this kind of second mortgage has higher interest.

The satisfaction will be the same, no matter how you manage to pull together the down payment. Your new home will be worth it!

Want to discuss down payments? Give us a call: 214-865-7442.