Building Your Down Payment

Lots of borrowers qualify for various loan programs, but they don't have much to pay a down payment. Want to buy a new house, but don't know how you should get together your down payment?

Cut expenses and save. Look for ways to trim your monthly expenses to put away money for a down payment. You might also try enrolling in an automatic savings plan to automatically have a specific amount from your paycheck moved into a savings account. You would be wise to look into some big expenses in your spending history that you can do without, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay local for your annual vacation.

Work a second job and sell items you don't need. Maybe you can find an additional job and save your earnings. Additionally, you can make an exhaustive list of things you may be able to sell. Unused gold jewelry can be sold at local jewelry stores. Maybe you own collectibles you can put up for sale on an auction website, or quality household items for a tag or garage sale. You could also look into what your investments could sell for.

Borrow funds from a retirement plan. Check the parameters of your particular plan. Some homebuyers get down payment money by withdrawing funds from IRAs or borrowing from 401(k) plans. Make sure to learn about the tax consequences, repayment terms, and any early withdrawal penalties.

Request a generous gift from your family. Many homebuyers somtimes receive help with their down payment help from caring parents and other family members who may be eager 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.

Research housing finance agencies. These types of agencies provide provisional mortgage loans to moderate and low income borrowers, buyers interested in sprucing up a residence in a particular area, and additional specific kinds of buyers as defined by each finance agency. Working with 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 you with a reduced rate of interest, help with your down payment, and offer other benefits. These non-profit programs were established to boost home ownership in specific neighborhoods.

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

• FHA loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low to moderate-income families qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a mortgage. Interest rates for an FHA loan are generally the going interest rate, while the down payment amounts for an FHA mortgage are below those of conventional loans. Closing costs might be covered by the mortgage, and your down payment can be as low as 3 percent of the total.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan requires no down payment, has mimimal closing costs, and provides the benefit of a competitive rate of interest. While it's true that the loans don't originate from the VA, the department verfifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes with the first. In most cases the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than needing to pull together the usual 20% down payment.

• Carry-Back loans

  We a seller carries back a second mortgage, the seller loans you part of his or her home equity. The buyer finances most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a slightly higher interest rate with the loan from the seller.

No matter how you gather down payment funds, the satisfaction of reaching the goal of owning your own home will be just as great!

Want to discuss down payments? Give us a call at 9094671090.