Building Your Down Payment

Many borrowers can easily qualify for a loan, but they can't afford a large down payment. Below are a few straightforward methods that will help you get together your down payment

Tighten your belt and save. Turn your budget upside-down to discover extra money to save for your down payment. Also, you can look into bank programs in which a specific portion of your paycheck is automatically transferred into savings every pay period. Some practical ways to save additional funds include moving into a residence that is less expensive, and skipping a year's vacation.

Work a second job and sell things you do not need. Look for a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. In addition, you can make an exhaustive inventory of items you may be able to sell. Unused gold jewelry can bring a good amount from local jewelers. You may own collectibles you can put up for sale on an auction website, or household items for a tag or garage sale. Also, you might want to consider selling any investments you own.

Borrow your down payment from your retirement plan. Explore the details of your individual plan. Some people get down payment money from withdrawing from their IRAs or borrowing from their 401(k) plans. Make sure you are clear about any penalties, the effect this could have on income taxes, and repayment terms.

Request a generous gift from your family. First-time homebuyers somtimes receive down payment assistance from caring family members who are able to help get them in 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 programs are extended to homebuyers in certain situations, like low income homebuyers or homebuyers planning to renovating homes in a specific area, among others. With the help of a housing finance agency, you probably will be given a below market interest rate, down payment assistance and other advantages. These types of agencies can assist eligible buyers with a reduced interest rate, help with your down payment, and offer other benefits. These non-profit programs were established to build up home ownership in certain places.

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

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income families qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for financing. Interest rates for an FHA loan are typically the going interest rate, while the down payment amounts with an FHA mortgage will be below those of conventional loans. The required down payment may be as low as 3 percent and the closing costs might be covered by the mortgage loan.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This particular loan requires no down payment, has mimimal closing costs, and offers a competitive rate of interest. Although the VA doesn't provide the loans, it does issue a certificate of eligibility to qualify for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close along with the first. Usually the piggyback loan is for 10 percent of the purchase price, and the first mortgage covers 80 percent. The borrower covers the remaining 10%, rather than needing to pull together the usual 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to loan you a piece of his own equity to assist you with your down payment funds. You would borrow the majority of the purchase price from a traditional lending institution and borrow the remainder from the seller. Typically you will pay a somewhat higher interest rate with the loan financed by the seller.

Want to discuss down payment options? Call us at 5626935048.