Your Down Payment

Lots of folks who are looking to buy a new home can qualify for various loan programs, but they don't have a lot of cash to pay a down payment. Here's where you start

Reduce expenses and save. Scrutinize your budget to uncover extra money to save for your down payment. There are bank programs through which a portion of your take-home pay is automatically placed into savings every pay period. You could look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you may move into less expensive housing, or stay local for your vacation.

Sell items you do not need and find a part-time job. Try to get a second job. This can be exhausting, but the temporary trial can help you get your down payment. In addition, you can make an exhaustive list of items you can sell. Unused gold jewelry can bring a good price from local jewelry stores. You may own desirable items you can put up for sale on an online auction, or household goods for a tag or garage sale. You can also explore what your investments will sell for.

Borrow funds from your retirement plan. Investigate the provisions of your retirement plan. It is possible to borrow money from a 401(k) plan for a down payment or withdraw from an Individual Retirement Account. You will want to ensure you are clear about any penalties, the way this could affect on your taxes, and repayment obligation.

Ask for assistance from members of your family. Many homebuyers are sometimes lucky enough to get down payment assistance from thoughtful parents and other family members who may be eager to help them get into their own home. Your family members may be pleased to help you reach the goal of buying your own home.

Contact housing finance agencies. Provisional loan programs are extended to homebuyers in specific situations, such as low income purchasers or people looking to improve houses in a targeted area, among others. With the help of a housing finance agency, you may be given a below market interest rate, down payment assistance and other benefits. Housing finance agencies can help you with a reduced interest rate, get you your down payment, and offer other assistance. The main purpose of not-for-profit housing finance agencies is promoting residence ownership in particular places.

Explore no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low and moderate-income families qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting home financing. FHA aids first-time homebuyers and others who would not be eligible for a typical loan on their own, by providing mortgage insurance to the lenders. Down payment sums for FHA mortgages are smaller than those of typical mortgages, even though these loans have average interest rates. The required down payment can go as low as three percent and the closing costs can be covered by the mortgage loan.

• VA mortgages

  VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people are eligible for a VA loan, which generally offers a low interest rate, no down payment, and reduced closing costs. Even though the loans aren't actually provided by the VA, the office verfifies applicants by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close with the first. Usually the piggyback loan takes care of 10 percent of the purchase amount, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, instead of come up with the usual 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to loan you some of his home equity to help you get your down payment money. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Generally, this form of second mortgage has a higher rate of interest.

Want to discuss down payment options? Call us at 720-598-8300.