Putting Together Your Down Payment

Lots of borrowers can easily qualify for several different kinds of mortgages, but they don't have a large sum of cash to put up a down payment. Do you want to look into getting a new home, but aren't sure how to get together your down payment?

Slash the budget and build up savings. Be on the look-out for ways you can reduce your monthly expenditures to save toward a down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a specific amount from your take-home pay deposited into savings. You could look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you might move into less expensive housing, or skip a vacation.

Sell items you do not need and get a second job. Look for an additional job. This can be rough, but the temporary trial can provide your down payment money. In addition, you can make an exhaustive inventory of things you can sell. Broken gold jewelry can bring a good price from local jewelry stores. A closetful of small things might add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you hold.

Borrow from your retirement plan. Investigate the parameters of your specific plan. It is possible to take out funds from a 401(k) for a down payment or get a withdrawal from an IRA. Make sure you comprehend the tax ramifications, repayment terms, and early withdrawal penalties.

Request a gift from your family. First-time homebuyers are sometimes lucky enough to get down payment assistance from caring family members who are able to help them get into their first home. Your family members may be eager to help you reach the goal of owning your own home.

Contact housing finance agencies. Special loan programs are extended to homebuyers in certain situations, such as low income homebuyers or buyers planning to remodel homes in a certain part of town, among others. With the help of this type of agency, you probably will get a below market interest rate, down payment assistance and other perks. Housing finance agencies can assist you with a lower interest rate, help with your down payment, and provide other assistance. The primary goal of non-profit housing finance agencies is to boost the purchase of homes in specific parts of the city.

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

• FHA mortgage 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 individuals get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time homebuyers and others who may not be able to qualify for a typical mortgage loan by themselves, by providing mortgage insurance to lenders. Down payment requirements for FHA loans are lower than those for conventional mortgage loans, even though these loans have average interest rates. The required down payment can go as low as three percent and the closing costs could be covered by the mortgage.

• VA loans

  VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which typically offers a reasonable rate of interest, no down payment, and reduced closing costs. While the mortgage loans are not actually provided by the VA, the department verfifies applicants by providing eligibility certificates.

• Piggy-back loans

  You may fund your down payment using a second mortgage that closes with the first. Generally the piggyback loan is for 10 percent of the purchase price, and the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow a portion of the seller's 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. Typically you will pay a slightly higher interest rate with the loan financed by the seller.

The satisfaction will be the same, no matter which method you use to pull together your down payment. Your brand new home will be your reward!

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