Putting Together Your Down Payment

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Many buyers can qualify for several different kinds of mortgages, but they don't have a lot of cash to put up a down payment. Below are a few straightforward ways to put together your down payment

Slash your budget and build up savings. Look for ways to trim your expenses to put away money for a down payment. Also, you can look into bank programs in which a specific portion of your take-home pay is automatically placed into a savings account every pay period. Some practical approaches to save additional funds include moving into less expensive housing, and skipping your vacation for a year or two.

Work more and sell items you do not need. Perhaps you can find an additional job to get your down payment money. In addition, you can make a comprehensive inventory of things you may be able to sell. Unworn gold jewelry can be sold at local jewelry stores. You might own desirable items you can sell at an online auction, or quality household goods for a tag or garage sale. Also, you can look into selling any investments you hold.

Borrow from your retirement plan. Research the specifics of your individual plan. It is possible to borrow money from a 401(k) for you down payment or withdraw from an Individual Retirement Account. Make sure to ask your plan representative about the tax ramifications, your obligation for repaying the money, and any early withdrawal penalties.

Ask for help from members of your family. First-time homebuyers sometimes receive help with their down payment help from gracious parents and other family members who may be able 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.

Research housing finance agencies. Special mortgage loans are provided to buyers in specific circumstances, like low income homebuyers or buyers looking to remodel homes in a targeted area, among others. Working through a housing finance agency, you may get an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies may assist you with a reduced rate of interest, help with your down payment, and offer other assistance. The central goal of not-for-profit housing finance agencies is promoting home ownership in specific areas.

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

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income Americans qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who may not be able to qualify for a typical mortgage loan by themselves, by providing mortgage insurance to lenders. Interest rates with an FHA loan generally feature the going interest rate, but the down payment for an FHA mortgage are less than those of conventional loans. Closing costs may be financed within the mortgage, and the down payment may be as low as 3% of the purchase price.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan requires no down payment, has minimal closing costs, and provides the advantage of a competitive rate of interest. Although the mortgages are not actually issued by the VA, the office verifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. In contrast to 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 seller loans you part of his or her equity. You would borrow the majority of the purchase price from a traditional lender and finance the remaining amount with the seller. Often, this type of second mortgage will have a higher rate of interest.

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

Need to talk about down payments? Give us a call at 978-422-2311.