Putting Together Your Down Payment

Many buyers can qualify for a mortgage loan, but they don't have a lot of money to pay a down payment. Here are a few tips:

Reduce expenses and save. Scrutinize the budget to uncover extra money to save for your down payment. There are bank programs in which a portion of your take-home pay is automatically transferred into savings each pay period. Some effective methods to put together funds include moving into a residence that is less expensive, and staying home for your family vacation this year.

Work more and sell items you don't need. Maybe you can get an additional job and save your earnings. You can also seriously consider the possessions you actually need and the things you may be able to put up for sale. You may have collectibles you can put up for sale on an online auction, or household items for a tag or garage sale. Also, you can consider selling any investments you hold.

Borrow money from your retirement plan. Explore the specifics of your individual plan. You can borrow funds from a 401(k) for you down payment or withdraw from an Individual Retirement Account. Make sure to learn about the tax consequences, your obligation for repayment, and any penalties for withdrawing early.

Ask for a gift from family. Many homebuyers somtimes get down payment help from thoughtful parents and other family members who are able to help them get into their first home. Your family members may be happy at the chance to help you reach the milestone of owning your first home.

Research housing finance agencies. Special mortgage programs are extended to buyers in specific circumstances, like low income buyers or people looking to renovating homes in a particular neighborhood, among others. With the help of this kind of agency, you may receive a below market interest rate, down payment help and other incentives. These types of agencies can help eligible buyers with a reduced interest rate, help with your down payment, and offer other advantages. The main mission of not-for-profit housing finance agencies is to promote residential ownership in targeted areas.

Find out about low-down and no-down mortgages.

• Federal Housing Administration (FHA) 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 to moderate-income families get mortgages. An office 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 home loan. Interest rates for an FHA loan normally feature the current interest rate, but the down payment for an FHA mortgage are below those of conventional loans. Closing costs might be included in the mortgage, while your down payment can be as low as 3 percent of the total amount.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This special loan does not require a down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. Although the VA does not finance the loans, it does certify eligibility to apply for a VA mortgage.

• Piggy-back loans

  You can finance your down payment using a second mortgage that closes with the first. Usually the piggyback loan is for 10 percent of the purchase price, while the first mortgage finances 80 percent. In contrast to the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

• Carry-Back loans

  With a carry-back mortgage, the seller loans you part of his or her home equity. The buyer finances the majority of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Usually you will pay a somewhat higher rate on the loan financed by the seller.

No matter your method of pulling together down payment money, the satisfaction of living in your own home will be just as great!

Need to talk about down payments? Give us a call: 9043423622.