Your Down Payment

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

Cut expenses and save. Look for ways you can reduce your expenses to save toward a down payment. There are bank programs through which some of your take-home pay is automatically transferred into a savings account each pay period. You would be wise to look into some big expenses in your spending history that you can give up, or trim, at least temporarily. For example, you might move into less expensive housing, or skip a family vacation.

Work a second job and sell things you don't need. Look for an additional job. This can be rough, but the temporary trial can provide your down payment money. Additionally, you can put together a comprehensive inventory of things you can sell. Unused gold jewelry can bring a good amount from local jewelers. Multiple small things can add up to a nice sum at a garage or tag sale. You could also explore what your investments will bring if sold.

Borrow funds from a retirement plan. Explore the details of your individual plan. You can borrow funds from a 401(k) plan for a down payment or get a withdrawal from an IRA. Be sure you are clear about any penalties, the effect this could have on your income taxes, and repayment terms.

Ask for help from members of your family. First-time buyers somtimes receive help with their down payment assistance from thoughtful parents and other family members who are anxious to help get them in their first home. Your family members may be happy at the chance to help you reach the milestone of owning your own home.

Learn about housing finance agencies. Special mortgate loan programs are provided to buyers in certain situations, like low income purchasers or people looking to improve houses in a particular area, among others. Working with this kind of agency, you probably will receive a below market interest rate, down payment help and other benefits. Housing finance agencies can help you with a reduced rate of interest, help with your down payment, and offer other benefits. The main mission of non-profit housing finance agencies is to boost the purchase of homes in specific areas.

Explore no-down and low-down mortgages.

  • FHA mortgages

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical 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 mortgages. FHA offers mortgage insurance to the private lenders, helping the buyers to become eligible for a home loan. Interest rates with an FHA loan normally feature the market interest rate, but the down payment for an FHA mortgage will be below those of conventional loans. Closing costs can be financed within the mortgage, and your down payment can be as low as 3 percent of the purchase price.

  • VA mortgage loans

    VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which generally offers a low rate of interest, no down payment, and reduced closing costs. While the VA doesn't actually finance the 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. Most of the time, the piggyback loan is for 10 percent of the home's amount, and the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to loan you a portion of his home equity to help you get your down payment money. The buyer finances the majority of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Typically, this type of second mortgage has higher interest.

The feeling of accomplishment will be the same, no matter how you manage to pull together your down payment. Your new home will be well worth it!

Need to talk about your down payment? Call us at 305-967-7200.