Your Down Payment

Many borrowers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Below are a few ways to get together your down payment

Slash the budget and build up savings. Turn your budget upside-down to discover ways you can cut expenses to save for your down payment. You also could enroll in an automatic savings plan at your bank to have a portion of your pay automatically 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 may move into less expensive housing, or skip a vacation.

Sell things you do not really need and get a part-time job. Try to find a second job. This can be exhausting, but the temporary trial can provide your down payment money. In addition, you can make an exhaustive list of things you can sell. Unworn gold jewelry can bring a good price from local jewelers. Maybe you have desirable items you can put up for sale on an auction website, or household items for a tag or garage sale. You might also research what any investments you hold will sell for.

Borrow funds from your retirement plan. Check the parameters of your particular program. Many homebuyers get down payment money by withdrawing from Individual Retirement Accounts or taking money out of their 401(k) programs. Be sure you understand about any penalties, the way this will affect on taxes, and repayment obligation.

Ask for a gift from your family. First-time homebuyers are sometimes lucky enough to get down payment help from giving family members who are able to help get them in their first home. Your family members may be pleased to help you reach the goal of having your own home.

Contact housing finance agencies. Special mortgage programs are provided to homebuyers in specific circumstances, such as low income buyers or people planning to remodel homes in a specific part of town, among others. With the help of a housing finance agency, you can be given an interest rate that is below market, down payment assistance and other benefits. These kinds of agencies can help eligible homebuyers with a reduced rate of interest, help with your down payment, and offer other advantages. These non-profit programs exist to build up the value of homes in certain places.

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

• FHA mortgage loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low to moderate-income individuals qualify for mortgages. 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 able to qualify for a traditional loan on their own, by offering mortgage insurance to private lenders. Interest rates for an FHA loan are typically the going interest rate, while the down payment requirements for an FHA mortgage are less than those of conventional loans. The required down payment can be as low as three percent and the closing costs can be covered by the mortgage.

• VA mortgages

  VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a low fixed rate of interest, no down payment, and limited closing costs. Even though the mortgage loans are not actually issued by the VA, the office verfifies applicants by providing eligibility certificates.

• Piggy-back loans

  You may finance a down payment through a second mortgage that closes along with the first. Most of the time, the first mortgage is for 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" situation, the seller agrees to loan you part of his home equity to assist you with your down payment money. The buyer funds the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Generally, this type of second mortgage has higher interest.

No matter how you gather your down payment funds, the thrill of reaching the goal of living in your own home will be just as sweet!

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