Building Your Down Payment

Many borrowers qualify for a mortgage loan, but they can't afford a large down payment. Here are a few methods that will help you put together your down payment

Tighten your belt and save. Look for ways you can trim your expenses to put away money for a down payment. You could also try enrolling in an automatic savings plan to have a percentage of your payroll automatically deposited into your savings account. Some effective ways to put together funds include moving into a residence that is less expensive, and staying local for your vacation for a year or two.

Sell things you do not really need and find a part-time job. Try to find a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get serious about the possessions you really need and the things you could be able to sell. You may have desirable items you can sell on an online auction, or quality household items for a garage or tag sale. You can also explore what any investments you have may sell for.

Borrow from retirement funds. Explore the details of your particular plan. Some homebuyers get down payment money from withdrawing what they need from Individual Retirement Accounts or taking funds out of 401(k) plans. Be sure you are clear about any penalties, the way this may affect on your income taxes, and repayment obligation.

Ask for assistance from family members. Many buyers somtimes get help with their down payment help from thoughtful family members who may be eager to help them get into their own home. Your family members may be pleased at the chance to help you reach the milestone of buying your own home.

Research housing finance agencies. These agencies provide special mortgate loan programs to low and moderate-income buyers, buyers interested in remodeling a house within a particular area, and additional certain kinds of buyers as specified by the agency. Financing with this type of agency, you probably will receive a below market interest rate, down payment assistance and other incentives. These types of agencies may assist you with a reduced interest rate, get you your down payment, and offer other benefits. The principal purpose of not-for-profit housing finance agencies is to promote home ownership in particular parts of the city.

Find out about low-down and no-down mortgage loans.

• Federal Housing Administration (FHA) mortgages

  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 aiding low to 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, enabling new homebuyers who will not qualify for a traditional loan, to obtain financing. Interest rates with an FHA mortgage are usually the market interest rate, but the down payment amounts for an FHA mortgage will be lower than those of conventional loans. Closing costs can be included in the mortgage, while the down payment could be as low as 3 percent of the total.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This special loan requires no down payment, has mimimal closing costs, and provides the benefit of a competitive rate of interest. Even though the loans aren't actually financed by the VA, the department verfifies borrowers by providing eligibility certificates.

• Piggy-back loans

  You may finance a down payment with a second mortgage that closes along with the first. Often the first mortgage is for 80% of the purchase price and the "piggyback" funds 10%. Instead of the traditional 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  With a carry-back mortgage, the you borrow a portion of the seller's home equity.. You would finance the largest portion of the purchase price with a traditional lending institution and finance the remainder with the seller. Often, this type of second mortgage has higher interest.

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

Need to talk about your down payment? Give us a call at (562) 693-5048.