Building Your Down Payment

Lots of borrowers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to buy a new home, but aren't sure how to put together a down payment?

Cut expenses and save. Be on the look-out for ways you can reduce your monthly expenses to save toward a down payment. You also might enroll in an automatic savings plan to automatically have a specific portion of your paycheck moved into savings. Some practical ways to put together funds include moving into less expensive housing, and staying local for your family vacation for a year or two.

Work more and sell items you don't need. Maybe you can find a second job to get your down payment money. You can also seriously consider the possessions you actually need and the things you may be able to put up for sale. You may own desirable items you can sell at an auction website, or quality household goods for a garage or tag sale. You could also explore what your investments will sell for.

Borrow funds from your retirement plan. Research the details of your individual plan. Many homebuyers get down payment money from withdrawing from Individual Retirement Accounts or getting funds out of 401(k) plans. Be sure you comprehend the tax consequences, your obligation for repaying the money, and any early withdrawal penalties.

Ask for assistance from family members. First-time buyers somtimes receive help with their down payment assistance from thoughtful parents and other family members who are willing to help them get into their own home. Your family members may be pleased at the chance to help you reach the goal of having your own home.

Learn about housing finance agencies. Provisional mortgate loan programs are given to homebuyers in specific situations, such as low income purchasers or future homeowners planning to remodel houses in a specific part of town, among others. Working through a housing finance agency, you can receive a below market interest rate, down payment help and other advantages. Housing finance agencies may help eligible homebuyers with a reduced interest rate, get you 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 places.

Explore no-down and low-down mortgages.

• FHA loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low to moderate-income families qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, enabling homebuyers who will not qualify for a traditional mortgage, to receive financing. Interest rates for an FHA mortgage are generally the market interest rate, but the down payment with an FHA loan are below those of conventional loans. The down payment may go as low as three percent while the closing costs may be financed in the mortgage loan.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan requires no down payment, has mimimal closing costs, and offers a competitive rate of interest. While the mortgages are not actually issued by the VA, the department certifies applicants by issuing eligibility certificates.

• Piggy-back loans

  You may finance a down payment through a second mortgage that closes with the first. Generally the piggyback loan takes care of 10 percent of the home's amount, and the first mortgage covers 80 percent. The borrower covers the remaining 10%, instead of needing to pull together the typical 20% down payment.

• Carry-Back loans

  In the option of the seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. You would finance the majority of the purchase price with a traditional lender and finance the remainder with the seller. Generally, this form of second mortgage has higher interest.

No matter your strategy of getting together down payment funds, the satisfaction of owning your own home will be just as great!

Need to talk about your down payment? Call us: 2147390569.