Putting Together Your Down Payment

Lots of folks who are looking to purchase a new house can qualify for several different kinds of mortgages, but they don't have a lot of money to put up the standard down payment. Do you want to buy a new house, but aren't sure how to put together your down payment?

Reduce expenses and save. Look for ways you can trim your expenditures to put away money for a down payment. You could also decide to enroll in an automatic savings plan to automatically have a predetermined portion of your paycheck deposited into your savings account. Some practical strategies to put together funds include moving into less expensive housing, and staying home for your family vacation for a year or two.

Sell things you do not really need and get a second job. Try to get an additional job. This can be exhausting, but the temporary trial can provide your down payment money. You can also seriously consider the possessions you actually need and the things you can sell. A closetful of small things may add up to a nice sum at a garage or tag sale. Also, you can think about selling any investments you own.

Borrow from your retirement plan. Explore the specifics of your individual plan. You can borrow money from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Make sure to ask your plan representative about the tax ramifications, your obligation for repaying funds, and early withdrawal penalties.

Ask for assistance from generous members of your family. Many homebuyers are often lucky enough to get down payment assistance from caring parents and other family members who may be prepared to help them get into their own home. Your family members may be happy at the chance to help you reach the goal of having your own home.

Contact housing finance agencies. These agencies offer provisional mortgage programs to low and moderate-income buyers, buyers interested in remodeling a home in a particular part of the city, and additional certain types of buyers as specified by each agency. With the help of this kind of agency, you may be given a below market interest rate, down payment assistance and other perks. These types of agencies may assist eligible homebuyers with a reduced interest rate, get you your down payment, and provide other benefits. These non-profit agencies exist to build up community in specific places.

Research no-down and low-down mortgages.

• FHA mortgages

  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 aiding low and moderate-income individuals get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgage loans. FHA offers mortgage insurance to private lenders, ensuring the buyers are eligible for a mortgage loan. Down payment requirements for FHA loans are less than those for traditional mortgages, although these mortgages hold current interest rates. Closing costs might be included in the mortgage, while the down payment can be as low as 3% of the purchase price.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan does not require a down payment, has mimimal closing costs, and provides the benefit of a competitive rate of interest. Although the loans are not actually financed by the VA, the office certifies applicants by providing eligibility certificates.

• Piggy-back loans

  You can finance a down payment using a second mortgage that closes along with the first. Usually the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. Instead of the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" situation, the seller commits to loan you part of his home equity to help you get your down payment funds. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Typically you'll pay a somewhat higher interest rate with the loan from the seller.

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

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