Your Down Payment

Many folks who would like to purchase a new home can qualify for a mortgage loan, but they can't afford a large down payment. Here are a few straightforward ways to put together a down payment

Cut expenses and save. Look for ways you can reduce your expenses to set aside funds for a down payment. You might also try enrolling in an automatic savings plan at your bank to have a percentage of your pay automatically transferred into your savings account. You might look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay local for your family vacation.

Sell things you don't really need and find a part-time job. Perhaps you can get an additional job and save your earnings. You can also seriously consider the possessions you really need and the things you can sell. You might own desirable items you can put up for sale at an auction website, or household items for a tag or garage sale. Also, you might want to look into selling any investments you own.

Borrow from retirement funds. Check the provisions of your particular plan. Many people get down payment money by withdrawing what they need from their IRAs or getting money out of their 401(k) plans. Make sure you are clear about any penalties, the effect this could have on income taxes, and repayment obligation.

Ask for assistance from family members. First-time buyers are sometimes lucky enough to receive help with their down payment assistance from thoughtful family members who are willing to help get them in their own home. Your family members may be eager to help you reach the goal of buying your first home.

Learn about housing finance agencies. These agencies offer special loan programs to low and moderate-income homebuyers, buyers interested in sprucing up a residence within a particular part of the city, and additional groups as defined by the finance agency. With the help of this kind of agency, you may get a below market interest rate, down payment assistance and other perks. These types of agencies may assist you with a reduced rate of interest, get you your down payment, and offer other assistance. These non-profit programs were established to promote the value of homes in specific places.

Find out about low-down and no-down mortgage loans.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low and moderate-income families qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who need to qualify for mortgages. FHA helps first-time buyers and others who would not be able to qualify for a traditional mortgage loan by themselves, by providing mortgage insurance to private lenders. Down payment requirements for FHA mortgages are less than those of typical mortgage loans, even though these mortgages hold current interest rates. The down payment can go as low as three percent while the closing costs could be included in the mortgage loan.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan does not require a down payment, has reduced closing costs, and offers a competitive rate of interest. Although the loans don't originate from the VA, the office certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. Often the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than come up with the typical 20% down payment.

• Carry-Back loans

  With a carry-back mortgage, the seller loans you part of his or her equity. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Usually this form of second mortgage will have a higher rate of interest.

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

Need to talk about the best options for down payments? Give us a call: 214-865-7442.