Putting Together Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they don't have a lot of cash to put up the standard down payment. Here are a few ways to put together a down payment

Tighten your belt and save. Scrutinize your budget to find ways you can cut expenses to go toward your down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a predetermined amount from your paycheck deposited into your savings account. You would be wise to look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you may move into less expensive housing, or stay close to home for your vacation.

Work a second job and sell things you do not need. Try to get an additional job. This can be rough, but the temporary difficulty can provide your down payment money. In addition, you can make an exhaustive list of things you may be able to sell. Unused gold jewelry can bring a good amount from local jewelers. Maybe you have collectibles you can sell at an online auction, or quality household items for a tag or garage sale. Also, you can look into selling any investments you own.

Borrow from your retirement funds. Explore the specifics of your particular plan. You may pull out money from a 401(k) for a down payment or withdraw from an Individual Retirement Account. You will need to make sure you know about any penalties, the way this could affect on income taxes, and repayment obligation.

Request a gift from your family. First-time homebuyers are often fortunate enough to get down payment assistance from giving family members who are eager to help get them in their first home. Your family members may be inclined to help you reach the milestone of buying your own home.

Learn about housing finance agencies. These types of agencies provide special mortgage loans for moderate and low income buyers, buyers with an interest in rehabilitating a residence within a targeted part of the city, and other particular types of buyers as defined by each agency. Working with this type of agency, you may receive an interest rate that is below market, down payment help and other incentives. These types of agencies can help you with a reduced interest rate, get you your down payment, and provide other assistance. The central goal of not-for-profit housing finance agencies is promoting home ownership in specific places.

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

  • 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 role in helping low and moderate-income Americans get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to qualify for mortgage loans. FHA aids first-time homebuyers and others who may not be eligible for a typical loan on their own, by offering mortgage insurance to the private lenders. Down payment totals for FHA loans are smaller than those of conventional mortgage loans, even though these loans come with current interest rates. Closing costs might be covered by the mortgage, and the down payment may be as low as 3% of the total amount.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan requires no down payment, has limited closing costs, and provides the benefit of a competitive interest rate. While the VA does not issue the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Usually the piggyback loan is for 10 percent of the home's price, and the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, instead of putting the usual 20% down payment.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Generally, this kind of second mortgage has higher interest.

No matter your strategy of putting together your down payment, the thrill of reaching the goal of living in your own home will be just as great!

Want to discuss the best options for down payments? Give us a call: 305-967-7200.