Putting Together Your Down Payment

Many people who are looking to purchase a new home can qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to look into getting a new house, but don't know how to get together your down payment?

Tighten your belt and save. Scrutinize your budget to find extra money to save for your down payment. You could also try enrolling in an automatic savings plan at your bank to have a portion of your pay automatically moved into your savings account. You would be wise to look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you might move into less expensive housing, or stay local for your family vacation.

Sell things you don't need and find a part-time job. Perhaps you can get a second job and build up your earnings. In addition, you can make a comprehensive inventory of things you may be able to sell. Broken gold jewelry can be sold at local jewelry stores. Maybe you have desirable items you can put up for sale at an online auction, or quality household items for a tag or garage sale. Also, you might want to think about selling any investments you hold.

Tap into retirement funds. Check the parameters of your specific program. It is possible to pull out money from a 401(k) for a down payment or withdraw from an IRA. Be sure you understand about any penalties, the way this will affect on your income taxes, and repayment terms.

Request a gift from family. First-time buyers are often lucky enough to receive help with their down payment assistance from giving parents and other family members who are anxious to help them get into their own home. Your family members may be pleased at the chance to help you reach the goal of owning your first home.

Learn about housing finance agencies. These types of agencies offer special mortgage loans for moderate and low income homebuyers, buyers with an interest in renovating a residence within a particular part of the city, and additional particular kinds of buyers as defined by each agency. With the help of a housing finance agency, you may get a below market interest rate, down payment assistance and other perks. These types of agencies may assist you with a reduced rate of interest, get you your down payment, and provide other assistance. These non-profit agencies exist to boost the value of homes in specific neighborhoods.

Explore no-down and low-down mortgage loans.

• 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 helping low to moderate-income individuals qualify for 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 buyers and others who would not be eligible for a traditional mortgage loan on their own, by offering mortgage insurance to the private lenders. Down payment amounts for FHA mortgages are smaller than those of conventional mortgage loans, even though these loans have average interest rates. The down payment may be as low as three percent while the closing costs could be included in the mortgage.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This special loan does not require a down payment, has limited closing costs, and offers a competitive rate of interest. Even though the mortgage loans don't originate from the VA, the department certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of come up with the typical 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to loan you a portion of his own equity to help you get your down payment money. The buyer funds the highest percentage of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a somewhat higher interest rate with the loan financed by the seller.

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

Want to discuss down payments? Call us at (585) 282-0960.