Putting Together Your Down Payment

Many buyers can easily qualify for a loan, but they don't have a lot of money to pay a down payment. Here's where to get started

Slash your budget and build up savings. Be on the look-out for ways you can reduce your monthly expenses to set aside funds for a down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a set amount from your paycheck transferred into savings. Some effective approaches to build up funds include moving into housing that is less expensive, and skipping a year's vacation.

Sell things you don't need and find a part-time job. Look for an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. In addition, you can put together an exhaustive inventory of things you can sell. Broken gold jewelry can be sold at local jewelry stores. Maybe you have desirable items you can put up for sale on an online auction, or quality household goods for a garage or tag sale. Also, you can consider selling any investments you hold.

Tap into retirement funds. Investigate the parameters of your particular plan. You can borrow money from a 401(k) for a down payment or make a withdrawal from an Individual Retirement Account. Make sure you understand the tax ramifications, repayment terms, and any penalties for withdrawing early.

Request a gift from your family. Many buyers are often fortunate enough to receive help with their down payment assistance from giving parents and other family members who may be prepared to help them get into their own home. Your family members may be pleased to help you reach the milestone of buying your own home.

Learn about housing finance agencies. These types of agencies offer provisional loan programs for moderate and low income buyers, buyers interested in remodeling a residence in a specific area, and additional certain kinds of buyers as specified by the agency. With the help of a housing finance agency, you can receive a below market interest rate, down payment help and other advantages. These kinds of agencies can help eligible homebuyers with a reduced rate of interest, get you your down payment, and provide other benefits. The central mission of not-for-profit housing finance agencies is build up the purchase of homes in targeted parts of the city.

Find out about low-down and no-down mortgage loans.

• Federal Housing Administration (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 part in aiding low to moderate-income individuals qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who would not be able to qualify for a traditional mortgage loan by themselves, by providing mortgage insurance to the private lenders. Interest rates with an FHA loan are usually the market interest rate, while the down payment requirements with an FHA mortgage will be smaller than those of conventional loans. The down payment can be as low as 3 percent and the closing costs can be packaged in the mortgage.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This specialized loan requires no down payment, has mimimal closing costs, and offers a competitive rate of interest. Although the VA doesn't provide the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  You may fund your down payment through a second mortgage that closes along with the first. Generally the piggyback loan is for 10 percent of the purchase price, while the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  We a seller carries back a second mortgage, the seller loans you part of his or her home equity. In this scenario, you would borrow the majority of the purchase price from a traditional lender and finance the remainder with the seller. Often, this type of second mortgage will have higher interest.

Need to talk about the best options for down payments? Give us a call at 7205988300.