Building Your Down Payment

Lots of people who are looking to purchase a new house qualify for various loan programs, but they don't have much to put up a down payment. Here are a few straightforward methods that will help you put together a down payment

Slash your budget and build up savings. Be on the look-out for ways to reduce your expenses to put away money for a down payment. You could also try enrolling in an automatic savings plan to have a portion of your payroll automatically moved into savings. You could look into some big expenses in your budget that you can do without, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or stay local for your family vacation.

Sell things you do not need and find a part-time job. Look for a second job. This can be rough, but the temporary trial can help you get your down payment. In addition, you can put together a comprehensive inventory of items you may be able to sell. Unworn gold jewelry can bring a good amount from local jewelers. Multiple small things could add up to a fair amount at a garage or tag sale. Also, you can consider selling any investments you own.

Borrow from your retirement funds. Investigate the provisions of your specific program. Many people get down payment money from withdrawing what they need from Individual Retirement Accounts or borrowing from their 401(k) programs. Be sure to learn about the tax ramifications, your obligation for repayment, and any early withdrawal penalties.

Request a generous gift from your family. First-time buyers are sometimes lucky enough to get help with their down payment help from thoughtful family members who may be prepared to help them get into their own home. Your family members may be pleased to help you reach the milestone of having your own home.

Contact housing finance agencies. These types of agencies provide special mortgage programs to moderate and low income homebuyers, buyers with an interest in renovating a residence within a targeted area, and additional certain types of buyers as specified by each finance agency. With the help of a housing finance agency, you can get a below market interest rate, down payment assistance and other advantages. Housing finance agencies may assist you with a reduced rate of interest, help with your down payment, and offer other assistance. The central goal of non-profit housing finance agencies is to boost home ownership in specific parts of the city.

Research no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low to moderate-income individuals get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, making the buyers eligible for a home loan. Interest rates for an FHA loan are normally the current interest rate, while the down payment requirements for an FHA mortgage will be smaller than those of conventional loans. Closing costs might be financed within the mortgage, and the down payment could be as low as 3% of the total.

• VA mortgage loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can get a VA loan, which generally offers a low fixed interest rate, no down payment, and reduced closing costs. Even though the VA does not provide the mortgage loans, it does certify eligibility to apply for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. Often the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. Rather than the usual 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow a portion of the seller's home equity.. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Often, this kind of second mortgage will have a higher rate of interest.

No matter how you gather down payment funds, the thrill of reaching the goal of living in your own home will be just as great!

Need to talk about down payments? Give us a call: 817-878-4220.