Putting Together Your Down Payment

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Lots of people who are looking to buy a new house can qualify for various loan programs, but they can't afford a large down payment. Below are a few straightforward methods that will help you get together your down payment

Slash the budget and build up savings. Turn your budget upside-down to discover extra money to go toward your down payment. There are bank programs in which a portion of your paycheck is automatically deposited into a savings account every pay period. You could look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or skip a vacation.

Work a second job and sell items you don't need. Perhaps you can find an additional job to get your down payment money. You can also get serious about the possessions you really need and the things you may be able to put up for sale. A closet full of small things may add up to a nice sum at a garage or tag sale. You can also research what any investments you have will bring if sold.

Borrow from your retirement funds. Explore the details of your individual plan. Many people get down payment money by withdrawing funds from IRAs or borrowing from 401(k) programs. Be sure you are knowledgeable about any penalties, the effect this will have on taxes, and repayment terms.

Ask for help from generous members of your family. First-time homebuyers are often fortunate enough to get down payment help from thoughtful 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 owning your own home.

Learn about housing finance agencies. Provisional mortgage loans are provided to homebuyers in specific situations, such as low income buyers or future homeowners planning to renovating houses in a certain place, among others. With the help of this type of agency, you may receive an interest rate that is below market, down payment assistance and other benefits. These kinds of agencies may assist eligible buyers with a lower rate of interest, help with your down payment, and provide other advantages. These non-profit agencies were formed to promote 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 a critical part in helping low to moderate-income families qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who need to get mortgage loans. FHA offers mortgage insurance to private lenders, making the buyers eligible for a mortgage. Interest rates with an FHA mortgage are usually the market interest rate, while the down payment for an FHA loan will be lower than those of conventional loans. The required down payment can be as low as three percent and the closing costs can be financed in the mortgage.

• VA loans

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a competitive interest rate, no down payment, and minimal closing costs. Even though the VA does not finance the mortgages, it does issue a certificate of eligibility to apply for a VA mortgage.

• Piggy-back loans

  You may fund your 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 purchase amount, and the first mortgage covers 80 percent. In contrast to the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to loan you a portion of his home equity to help you with your down payment funds. The buyer finances the majority of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Typically, this type of second mortgage will have higher interest.

No matter your strategy of getting together your down payment, the satisfaction of living in your own home will be just as sweet!

Want to discuss your down payment? Give us a call at 269-282-1612.