Your Down Payment

Lots of buyers can easily qualify for a loan, but they don't have a lot of money to pay the standard down payment. Want to look into getting a new house, but don't know how you should get together your down payment?

Slash the budget and build up savings. Turn your budget inside out to find ways you can cut expenses to go toward your down payment. There are bank programs through which some of your paycheck is automatically transferred into savings every pay period. You might look into some big expenses in your spending history that you can live without, or trim, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a family vacation.

Sell things you do not really need and get a part-time job. Try to get an additional job. This can be rough, but the temporary difficulty can provide your down payment money. You can also get creative about the things you could be able to sell. A closetful of small things could add up to a nice sum at a garage or tag sale. Also, you can think about selling any investments you own.

Tap into your retirement funds. Explore the details of your particular plan. It is possible to borrow money from a 401(k) for a down payment or withdraw from an IRA. Make sure you are knowledgable about any penalties, the way this could affect on your income taxes, and repayment obligation.

Ask for help from generous family members. First-time homebuyers are sometimes lucky enough to receive help with their 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 willing to help you reach the goal of buying your own home.

Contact housing finance agencies. These types of agencies offer provisional mortgage loans to moderate and low income homebuyers, buyers with an interest in renovating a residence within a targeted part of the city, and additional groups as specified by the finance agency. With the help of this kind of agency, you may receive a below market interest rate, down payment help and other incentives. Housing finance agencies may assist you with a lower rate of interest, get you your down payment, and offer other advantages. The principal purpose of not-for-profit housing finance agencies is promoting residential ownership in certain places.

Explore no-down and low-down mortgages.

• Federal Housing Administration (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 mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to the private lenders, enabling buyers who might not be eligible for a traditional mortgage loan, to receive financing. Interest rates for an FHA loan are usually the going interest rate, while the down payment for an FHA mortgage will be below those of conventional loans. Closing costs can be covered by the mortgage, while the down payment might be as low as 3 percent of the total amount.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan requires no down payment, has limited closing costs, and provides the benefit of a competitive interest rate. Even though the mortgage loans don't originate from the VA, the office certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  You may finance your down payment using a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage finances 80 percent. Rather than the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to lend you part of his own equity to assist you with your down payment funds. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a somewhat higher interest rate with the loan from the seller.

The satisfaction will be the same, no matter which method you use to come up with the down payment. Your brand new home will be your reward!

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