Building Your Down Payment

Many buyers can easily qualify for a mortgage loan, but they don't have a lot of cash to pay the standard down payment. Here are a few ideas:

Tighten your belt and save. Scrutinize the budget to uncover extra money to save for your down payment. You might also try enrolling in an automatic savings plan to have a percentage of your pay automatically moved into a savings account. Some practical approaches to put together funds include moving into a residence that is less expensive, and staying home for your vacation for a year or two.

Sell items you don't need and find a second job. Maybe you can get a second job to get your down payment money. In addition, you can make a comprehensive inventory of things you may be able to sell. Unused gold jewelry can be sold at local jewelry stores. Multiple small things could add up to a fair amount at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Tap into your retirement funds. Check the parameters of your retirement plan. Many people get down payment money by withdrawing funds from Individual Retirement Accounts or pulling money out of 401(k) plans. Be sure you are clear about any penalties, the way this will affect on your income taxes, and repayment obligation.

Ask for assistance from generous members of your family. First-time homebuyers somtimes receive help with their down payment assistance from gracious family members who are eager to help them get into their first home. Your family members may be inclined to help you reach the milestone of buying your own home.

Contact housing finance agencies. Provisional mortgage programs are given to homebuyers in certain situations, like low income buyers or people looking to renovating houses in a particular place, among others. With the help of a housing finance agency, you can be given an interest rate that is below market, down payment help and other benefits. These kinds of agencies may assist eligible homebuyers with a reduced rate of interest, get you your down payment, and provide other advantages. The principal purpose of non-profit housing finance agencies is boosting the purchase of homes in particular parts of the city.

Learn about low-down and no-down mortgage loan programs.

• FHA loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low and moderate-income individuals get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in qualifying for mortgage loans. FHA provides mortgage insurance to the private lenders, making the buyers eligible for a mortgage loan. Interest rates for an FHA loan are usually the going interest rate, while the down payment with an FHA mortgage will be below those of conventional loans. Closing costs might be financed in the mortgage, and your down payment could be as low as 3% of the total.

• VA mortgage loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which generally offers a low rate of interest, no down payment, and minimal closing costs. Although the VA does not actually provide the mortgage loans, it does issue a certificate of eligibility to apply for a VA mortgage.

• Piggy-back loans

  You can finance your down payment using a second mortgage that closes along with the first. Generally the piggyback loan takes care of 10 percent of the purchase price, while the first mortgage finances 80 percent. The borrower covers the remaining 10%, instead of come up with the usual 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to lend you a portion of his home equity to help you with your down payment money. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually this kind of second mortgage has a higher rate of interest.

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

Want to discuss down payment options? Give us a call: (562) 693-5048.