Your Down Payment

Lots of people who are looking to purchase a new house qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to buy a new house, but don't know how you should put together a down payment?

Tighten your belt and save. Scrutinize your budget to uncover ways you can cut expenses to save for your down payment. There are bank programs through which some of your take-home pay is automatically deposited into a savings account each pay period. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay local for your family vacation.

Work a second job and sell items you don't need. Try to get a second job. This can be rough, but the temporary difficulty can help you get your down payment. You can also seriously consider the possessions you actually need and the things you migh be able to put up for sale. A closetful of small things may add up to a fair amount at a garage or tag sale. You could also look into what your investments may sell for.

Borrow from your retirement plan. Investigate the parameters of your specific plan. You may pull out funds from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. You will need to be sure you are knowledgable about any penalties, the effect this may have on your taxes, and repayment terms.

Ask for assistance from members of your family. First-time homebuyers somtimes receive down payment help from giving parents and other 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 goal of owning your own home.

Research housing finance agencies. These types of agencies provide special mortgage loans to low and moderate-income homebuyers, buyers interested in sprucing up a house in a specific part of the city, and additional groups as specified by the agency. Working through a housing finance agency, you may get a below market interest rate, down payment assistance and other incentives. Housing finance agencies may help you with a reduced interest rate, get you your down payment, and provide other benefits. The principal mission of non-profit housing finance agencies is boosting the purchase of homes in particular parts of the city.

Learn about low-down and no-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 an important role in helping low to moderate-income families qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who need to get mortgage loans. FHA aids first-time homebuyers and others who would not be able to qualify for a typical mortgage loan on their own, by offering mortgage insurance to the private lenders. Interest rates for an FHA loan usually feature the market interest rate, but the down payment for an FHA mortgage will be lower than those of conventional loans. Closing costs can be covered by the mortgage, while the down payment could be as low as 3 percent of the total.

• VA mortgages

  VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which typically offers a low fixed rate of interest, no down payment, and limited closing costs. Even though the VA does not provide the loans, it does certify eligibility to apply for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Usually the piggyback loan takes care of 10 percent of the home's amount, and the first mortgage finances 80 percent. Rather than the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lending institution and finance the remainder with the seller. Typically, this kind of second mortgage will have a higher rate of interest.

The satisfaction will be the same, no matter which method you use to put together the down payment. Your brand new home will be your reward!

Want to discuss down payments? Give us a call: (585) 282-0960.