Your Down Payment

Lots of buyers qualify for various loan programs, but they don't have a lot of money to pay a down payment. Below are a few ways to put together your down payment

Slash your budget and build up savings. Turn your budget upside-down to discover extra money to go toward your down payment. You may also decide to enroll in an automatic savings plan at your bank to have a portion of your payroll automatically transferred into a savings account. Some practical methods to put together funds include moving into housing that is less expensive, and skipping a year's vacation.

Sell items you do not need and find a second job. Perhaps you can get a second job to get your down payment money. You can also seriously consider the possessions you really need and the things you can sell. Multiple small items might add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Borrow from retirement funds. Check the parameters of your particular program. You can borrow funds from a 401(k) for you down payment or make a withdrawal from an IRA. Be sure to ask your plan representative about the tax consequences, repayment terms, and any early withdrawal penalties.

Request a generous gift from your family. Many buyers are often lucky enough to get help with their down payment assistance from thoughtful family members who may be able to help get them in their first home. Your family members may be happy at the chance to help you reach the milestone of having your first home.

Learn about housing finance agencies. Provisional mortgage loans are provided to buyers in specific circumstances, such as low income purchasers or people planning to improve houses in a targeted area, among others. Working through this type of agency, you may receive an interest rate that is below market, down payment assistance and other advantages. These kinds of agencies may assist you with a reduced interest rate, get you your down payment, and provide other assistance. The primary goal of non-profit housing finance agencies is promoting residential ownership in particular parts of the city.

Research no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in helping low and moderate-income families get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, enabling new homebuyers who might not qualify for a traditional mortgage, to receive a mortgage. Down payment sums for FHA mortgages are lower than those of conventional mortgage loans, although these loans have average rates of interest. Closing costs can be financed within the mortgage, while your down payment may be as low as 3 percent of the purchase price.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This special loan does not require a down payment, has limited closing costs, and provides the benefit of a competitive interest rate. Even though the VA does not finance the loans, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. In most cases the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. Instead of 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 part of his own equity to help you get your down payment money. In this scenario, you would finance the largest portion of the purchase price with a traditional lender and borrow the remaining amount from the seller. Usually you will pay a somewhat 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 the down payment. Your new home will be worth it!

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