Building Your Down Payment

Many buyers qualify for various loan programs, but they don't have much to pay the standard down payment. Here's where you start

Tighten your belt and save. Turn your budget inside out to discover ways you can cut expenses to save for your down payment. You also might enroll in an automatic savings plan at your bank to automatically have a specific portion of your paycheck transferred into savings. You might look into some big expenses in your budget that you can live without, or reduce, at least temporarily. For example, you might move into less expensive housing, or stay local for your annual vacation.

Sell items you don't need and get a second job. Perhaps you can get a second job and save your earnings. Additionally, you can put together a comprehensive list of things you may be able to sell. Unworn gold jewelry can bring a good amount from local jewelers. You may own collectibles you can sell at an auction website, or household goods for a tag or garage sale. You might also look into what your investments may bring if sold.

Tap into retirement funds. Check the parameters of your retirement program. It is possible to borrow money from a 401(k) for you down payment or perform a withdrawal from an IRA. Be sure to ask your plan representative about the tax consequences, your obligation for repayment, and possible early withdrawal penalties.

Ask for help from generous family members. First-time homebuyers are often fortunate enough to receive down payment assistance from giving family members who may be eager to help them get into their own home. Your family members may be happy at the chance to help you reach the goal of buying your own home.

Research housing finance agencies. These agencies provide special loan programs for moderate and low income buyers, buyers with an interest in renovating a house within a specific area, and other groups as defined by the finance agency. Financing through a housing finance agency, you can get a below market interest rate, down payment help and other incentives. Housing finance agencies can assist you with a reduced rate of interest, get you your down payment, and offer other benefits. These non-profit programs exist to boost the value of homes in particular neighborhoods.

Research no-down and low-down mortgages.

• FHA loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low to moderate-income families qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in qualifying for mortgage loans. FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for a loan. Down payment totals for FHA mortgages are less than those for traditional mortgage loans, even though these loans come with current rates of interest. Closing costs may be covered by the mortgage, while the down payment may be as low as 3% of the total.

• VA mortgage loans

  VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people are eligible for a VA loan, which generally offers a low fixed interest rate, no down payment, and minimal closing costs. Even though the loans don't originate from the VA, the department certifies applicants by issuing eligibility certificates.

• Piggy-back loans

  You can finance your down payment using a second mortgage that closes at the same time as the first. Often the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. In contrast to the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to lend you some of his own equity to help you get your down payment money. You would borrow the largest portion of the purchase price from a traditional lending institution and finance the remaining amount with the seller. Usually you will pay a somewhat higher interest rate with the loan financed by the seller.

No matter your method of putting together your down payment funds, the thrill of reaching the goal of living in your own home will be just as sweet!

Want to discuss down payment options? Give us a call at 8776828787.