Putting Together Your Down Payment

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

Tighten your belt and save. Be on the look-out for ways you can trim your monthly expenditures to set aside money for a down payment. There are bank programs in which some of your paycheck is automatically placed into a savings account every pay period. You might look into some big expenses in your budget that you can do without, or trim, at least temporarily. For example, you may move into less expensive housing, or stay local for your annual vacation.

Work a second job and sell items you do not need. Try to find an additional job. This can be rough, but the temporary trial can help you get your down payment. You can also seriously consider the possessions you actually need and the items you migh be able to sell. Maybe you own collectibles you can sell on an auction website, or household items for a tag or garage sale. You could also explore what any investments you own could bring if sold.

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

Ask for assistance from generous members of your family. Many homebuyers somtimes get down payment assistance from thoughtful parents and other family members who may be able to help them get into their first home. Your family members may be eager to help you reach the milestone of having your first home.

Contact housing finance agencies. Provisional mortgage loans are offered to buyers in specific circumstances, like low income purchasers or future homeowners looking to improve houses in a certain neighborhood, among others. Working with this kind of agency, you can be given a below market interest rate, down payment assistance and other benefits. Housing finance agencies may assist you with a reduced rate of interest, get you your down payment, and provide other benefits. These non-profit agencies exist to boost the value of homes in specific places.

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

• FHA mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low and moderate-income Americans qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, ensuring the buyers are eligible for a mortgage. Interest rates for an FHA mortgage typically feature the current interest rate, while the down payment for an FHA mortgage are lower than those of conventional loans. The down payment can be as low as 3 percent while the closing costs could be covered by the mortgage.

• VA mortgages

  VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which typically offers a reasonable fixed rate of interest, no down payment, and minimal closing costs. Although the VA does not actually finance the mortgage loans, it does issue a certificate of eligibility to qualify for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. Usually the piggyback loan is for 10 percent of the purchase amount, and the first mortgage covers 80 percent. The borrower pays the remaining 10%, instead of needing to pull together the usual 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to lend you a piece of his home equity to help you get your down payment money. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a slightly higher interest rate on the loan financed by the seller.

Want to discuss down payment options? Call us at (562) 693-5048.