Building Your Down Payment

Lots of folks who would like to purchase a new house qualify for several different kinds of mortgages, but they can't afford a large down payment. Here's where you start

Slash the budget and build up savings. Scrutinize the budget to discover ways you can cut expenses to save for your down payment. You might also decide to enroll in an automatic savings plan to automatically have a set portion of your take-home pay moved into savings. You could look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or stay local for your family vacation.

Work a second job and sell things you do not need. Try to get an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also seriously consider the possessions you actually need and the items you can put up for sale. A closetful of small things may add up to a nice sum at a garage or tag sale. You can also research what your investments could sell for.

Borrow from retirement funds. Explore the specifics for your particular plan. You may pull out money from a 401(k) for you down payment or withdraw from an IRA. Make sure you understand about any penalties, the effect this will have on taxes, and repayment terms.

Ask for a generous gift from your family. First-time buyers somtimes get help with their down payment assistance from thoughtful family members who are able to help get them in their own home. Your family members may be inclined to help you reach the goal of buying your own home.

Learn about housing finance agencies. Provisional mortgage loans are offered to homebuyers in certain circumstances, such as low income buyers or homebuyers looking to renovating houses in a specific place, among others. Working through a housing finance agency, you can be given an interest rate that is below market, down payment help and other benefits. These kinds of agencies can help eligible buyers with a lower rate of interest, help with your down payment, and offer other advantages. The central mission of not-for-profit housing finance agencies is to promote the purchase of homes in particular areas.

Research no-down and low-down mortgage loan programs.

• 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 a vital part in assisting low and moderate-income families get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to qualify for mortgage loans. FHA provides mortgage insurance to private lenders, enabling new homebuyers who may not be eligible for a traditional mortgage, to receive financing. Down payment totals for FHA loans are less than those of conventional mortgages, even though these mortgages have current interest rates. The required down payment can go as low as 3 percent while the closing costs may be covered by the mortgage loan.

• VA loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which typically offers a competitive interest rate, no down payment, and minimal closing costs. While it's true that the mortgages aren't actually issued by the VA, the office certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Generally the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. The borrower covers the remaining 10%, rather than come up with the usual 20% down payment.

• Carry-Back loans

  In the option of a seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically you'll pay a slightly higher rate on the loan from the seller.

No matter your method of pulling together your down payment funds, the thrill of owning your own home will be just as great!

Need to talk about down payments? Call us at (585) 282-0960.