Your Down Payment

Many folks who are looking to buy a new house can easily qualify for several different kinds of mortgages, but they don't have a large sum of cash to pay the standard down payment. Here's where to get started

Tighten your belt and save. Be on the look-out for ways to reduce your expenses to put away money for a down payment. You might also decide to enroll in an automatic savings plan to have a portion of your pay automatically moved into a savings account. You might look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or stay close to home for your vacation.

Work more and sell items you do not need. Perhaps you can find a second job and build up 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 desirable items you can sell on an online auction, or quality household goods for a garage or tag sale. Also, you can consider selling any investments you hold.

Borrow money from your retirement plan. Investigate the provisions of your particular plan. Many people get down payment money from withdrawing what they need from their IRAs or getting funds out of 401(k) programs. Make sure you understand about any penalties, the way this could affect on your income taxes, and repayment terms.

Ask for assistance from generous members of your family. Many buyers somtimes receive help with their down payment assistance from caring family members who are prepared to help them get into their own home. Your family members may be pleased to help you reach the goal of having your first home.

Research housing finance agencies. These types of agencies provide special mortgate loan programs to moderate and low income borrowers, buyers with an interest in rehabilitating a home within a specific part of the city, and other specific kinds of buyers as defined by the agency. Working through this type of agency, you probably will get a below market interest rate, down payment help and other incentives. These kinds of agencies may assist you with a lower interest rate, get you your down payment, and provide other assistance. These non-profit agencies exist to boost community in specific places.

Explore no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income Americans get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who might not be eligible for a traditional mortgage by themselves, by providing mortgage insurance to the lenders. Down payment sums for FHA mortgages are less than those with typical mortgage loans, even though these loans have current interest rates. The required down payment may be as low as three percent while the closing costs might be included in the mortgage.

• VA mortgages

  VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which usually offers a competitive fixed interest rate, no down payment, and minimal closing costs. Even though the VA doesn't finance the loans, 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 purchase amount and the "piggyback" is for 10%. The borrower pays the remaining 10%, instead of needing to put together the usual 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller commits to lend you a portion of his own equity to help you get your down payment money. In this scenario, you would finance the majority of the purchase price with a traditional lender and finance the remainder with the seller. Generally, this type of second mortgage has higher interest.

The satisfaction will be the same, no matter how you manage to come up with your down payment. Your new home will be your reward!

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