Putting Together Your Down Payment

Lots of buyers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to buy a new house, but don't know how you should get together a down payment?

Slash your budget and build up savings. Look for ways to trim your expenses to put away money for a down payment. There are bank programs through which some of your take-home pay is automatically deposited into savings each pay period. Some practical methods to put together funds include moving into less expensive housing, and staying local for your family vacation this year.

Work a second job and sell things you do not need. Look for an additional job. This can be rough, but the temporary difficulty can help you get your down payment. Additionally, you can make an exhaustive inventory of things you may be able to sell. Broken gold jewelry can bring a good price from local jewelry stores. Maybe you own collectibles you can sell at an auction website, or household items for a garage or tag sale. You might also explore what your investments will bring if sold.

Tap into retirement funds. Investigate the parameters of your particular plan. You may borrow money from a 401(k) for a down payment or perform a withdrawal from an IRA. Be sure you know about any penalties, the way this may affect on taxes, and repayment terms.

Ask for assistance from family members. Many homebuyers somtimes receive down payment assistance from giving parents and other family members who are anxious to help them get into their own home. Your family members may be inclined to help you reach the goal of owning your own home.

Research housing finance agencies. These types of agencies provide provisional mortgage loans for moderate and low income borrowers, buyers interested in rehabilitating a house within a particular area, and other certain types of buyers as defined by each finance agency. Working with this type of agency, you can receive an interest rate that is below market, down payment help and other incentives. These types of agencies can help you with a lower rate of interest, get you your down payment, and provide other advantages. These non-profit agencies exist to build up home ownership in specific areas.

Research no-down and low-down mortgages.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in helping low and moderate-income individuals qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA aids first-time homebuyers and others who might not be able to qualify for a traditional mortgage by themselves, by providing mortgage insurance to the lenders. Down payment amounts for FHA loans are below those with conventional mortgages, even though these mortgages hold average interest rates. The down payment may be as low as 3 percent and the closing costs could be included in the mortgage.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This particular loan does not require a down payment, has limited closing costs, and offers a competitive rate of interest. Even though the mortgages don't originate from the VA, the department verfifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close with the first. Generally the piggyback loan is for 10 percent of the purchase amount, while the first mortgage finances 80 percent. Rather than the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to lend you part of his own equity to assist you with your down payment money. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Generally, this kind of second mortgage has higher interest.

The satisfaction will be the same, no matter how you manage to come up with your 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.