Building Your Down Payment

Lots of people who would like to buy a new home qualify for various loan programs, but they can't afford a large down payment. We have a few ideas

Reduce expenses and save. Be on the look-out for ways you can trim your expenditures to put away money for a down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a predetermined portion of your take-home pay transferred into savings. You could look into some big expenses in your spending history that you can live without, or trim, at least temporarily. For example, you might move into less expensive housing, or skip a family vacation.

Sell things you don't really need and find a second job. Perhaps you can get a second job and save your earnings. In addition, you can put together an exhaustive list of items you can sell. Unused gold jewelry can bring a good amount from local jewelry stores. You might own collectibles you can sell on an auction website, or quality household goods for a tag or garage sale. Also, you can look into selling any investments you own.

Borrow your down payment from a retirement plan. Investigate the parameters of your retirement program. You can borrow funds from a 401(k) plan for a down payment or make a withdrawal from an Individual Retirement Account. Be sure to find out about the tax ramifications, repayment terms, and possible penalties for withdrawing early.

Ask for a gift from your family. Many buyers somtimes get help with their down payment help from thoughtful family members who are prepared to help get them in their own home. Your family members may be happy at the chance to help you reach the milestone of buying your own home.

Contact housing finance agencies. Provisional loan programs are extended to homebuyers in specific situations, like low income purchasers or homebuyers looking to renovating houses in a particular neighborhood, among others. Working through this type of agency, you probably will get an interest rate that is below market, down payment help and other benefits. Housing finance agencies can assist eligible buyers with a reduced rate of interest, get you your down payment, and offer other assistance. The principal mission of non-profit housing finance agencies is promoting the purchase of homes in particular places.

Explore 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 significant role in assisting low to moderate-income buyers get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, making the buyers eligible for a loan. Interest rates for an FHA mortgage typically feature the going interest rate, but the down payment amounts for an FHA mortgage will be below those of conventional loans. The required down payment can be as low as 3 percent while the closing costs can be financed in the mortgage loan.

• VA loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans are eligible for a VA loan, which typically offers a reasonable fixed interest rate, no down payment, and reduced closing costs. Even though the mortgage loans are not actually financed by the VA, the department certifies applicants by providing eligibility certificates.

• Piggy-back loans

  You can fund your down payment using a second mortgage that closes along with the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. Rather than the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" situation, the seller commits to lend you a portion of his home equity to help you get your down payment funds. The buyer finances most of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Usually this form of second mortgage will have higher interest.

No matter your strategy of pulling together your down payment, the satisfaction of reaching the goal of owning your own home will be just as sweet!

Need to talk about the best options for down payments? Call us: 5626935048.