Your Down Payment

Many buyers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to look into getting a new home, but don't know how to put together a down payment?

Cut expenses and save. Scrutinize your budget to uncover ways you can cut expenses to save for your down payment. You might also try enrolling in an automatic savings plan to have a portion of your pay automatically deposited into your savings account. You could look into some big expenses in your budget that you can do without, or trim, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay local for your vacation.

Work more and sell items you do not need. Maybe you can get an additional job and save your earnings. In addition, you can put together an exhaustive list of things you may be able to sell. Broken gold jewelry can be sold at local jewelry stores. Maybe you own collectibles you can sell at an auction website, or household items for a tag or garage sale. You can also explore what your investments may sell for.

Borrow from your retirement funds. Research the details for your particular plan. You may pull out money from a 401(k) for a down payment or make a withdrawal from an IRA. Be sure to learn about the tax ramifications, your obligation for repayment, and any penalties for withdrawing early.

Ask for a generous gift from your family. First-time buyers somtimes get down payment help from caring family members who are eager to help them get into their first home. Your family members may be inclined to help you reach the milestone of owning your first home.

Learn about housing finance agencies. Provisional mortgage programs are extended to buyers in specific situations, such as low income buyers or homebuyers planning to remodel houses in a particular place, among others. With the help of a housing finance agency, you may get an interest rate that is below market, down payment help and other benefits. These kinds of agencies can help you with a lower rate of interest, help with your down payment, and provide other advantages. The central purpose of non-profit housing finance agencies is to promote the purchase of homes in targeted areas.

Learn about low-down and no-down mortgages.

• Federal Housing Administration (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 assisting low and moderate-income buyers qualify for mortgages. An office of the United States 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 loan. Down payment sums for FHA mortgages are lower than those of conventional mortgages, even though these loans have average interest rates. The down payment can be as low as 3 percent and the closing costs may be included in the mortgage.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This specialized loan requires no down payment, has limited closing costs, and provides a competitive rate of interest. Even though the mortgages are not actually issued by the VA, the department verfifies 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. In most cases the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. In contrast to the usual 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  In the option of the seller "carrying back a second mortgage," the seller loans you part of his or her home equity. The buyer finances the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a slightly higher rate with the loan financed by the seller.

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

Want to discuss down payment options? Give us a call at (612) 240-9922.