Your Down Payment

Lots of people who would like to purchase a new house qualify for several different kinds of mortgages, but they don't have much to put up a down payment. Do you want to look into getting a new house, but aren't sure how you should get together a down payment?

Reduce expenses and save. Be on the look-out for ways to trim your monthly expenditures to put away money for a down payment. Also, you can look into bank programs in which some of your take-home pay is automatically placed into a savings account each pay period. You could look into some big expenses in your spending history that you can live without, or reduce, at least temporarily. For example, you might move into less expensive housing, or skip a vacation.

Sell things you do not really need and find a second job. Try to get a second job. This can be rough, but the temporary difficulty can provide your down payment money. You can also get creative about the items you can put up for sale. A closetful of small things might add up to a fair amount at a garage or tag sale. Also, you can consider selling any investments you own.

Tap into retirement funds. Explore the details for your individual plan. Some homebuyers get down payment money by withdrawing from their Individual Retirement Accounts or pulling funds out of their 401(k) plans. Make sure you know about any penalties, the effect this may have on your taxes, and repayment obligation.

Ask for help from generous members of your family. First-time buyers are often fortunate enough to get down payment assistance from giving family members who are able to help them get into their own home. Your family members may be pleased at the chance to help you reach the goal of having your own home.

Contact housing finance agencies. These agencies provide special mortgate loan programs- for low and moderate-income borrowers, buyers with an interest in sprucing up a house in a targeted area, and other groups as defined by each finance agency. With the help of a housing finance agency, you probably will get a below market interest rate, down payment assistance and other incentives. Housing finance agencies can assist eligible homebuyers with a reduced rate of interest, get you your down payment, and offer other assistance. The principal goal of non-profit housing finance agencies is to promote residence ownership in specific parts of the city.

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

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in assisting low to moderate-income families get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, making the buyers eligible for financing. Interest rates with an FHA loan are normally the current interest rate, but the down payment for an FHA mortgage are less than those of conventional loans. Closing costs can be covered by the mortgage, while the down payment can be as low as 3 percent of the total amount.

• VA mortgage loans

  VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which typically offers a low fixed rate of interest, no down payment, and reduced closing costs. Even though the VA does not actually issue the mortgages, 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. Most of the time, the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. In contrast to the usual 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to lend you some of his own equity to help you with your down payment funds. The buyer finances the majority of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Usually this form of second mortgage will have a higher rate of interest.

The feeling of accomplishment will be the same, no matter how you manage to put together the down payment. Your brand new home will be worth it!

Need to talk about down payments? Give us a call at 5852820960.