Your Down Payment

Lots of people who would like to buy a new home qualify for several different kinds of mortgages, but they don't have a lot of money to put up the standard down payment. Do you want to look into getting a new house, but don't know how to get together your down payment?

Tighten your belt and save. Look for ways you can reduce your expenditures to put away money for a down payment. There are bank programs through which a portion of your paycheck is automatically placed into savings each pay period. Some practical methods to save additional funds include moving into less expensive housing, and skipping a year's vacation.

Sell things you do not need and find a part-time job. Perhaps you can get an additional job and save your earnings. Additionally, you can put together an exhaustive inventory of things you can sell. Unworn gold jewelry can bring a good amount from local jewelry stores. Maybe you own collectibles you can put up for sale at an auction website, or quality household goods for a tag or garage sale. You can also look into what any investments you own could bring if sold.

Borrow money from your retirement plan. Explore the details of your individual plan. Some homebuyers get down payment money from withdrawing funds from their Individual Retirement Accounts or getting funds out of their 401(k) plans. Make sure you are clear about any penalties, the effect this could have on income taxes, and repayment terms.

Ask for a generous gift from family. Many homebuyers are sometimes fortunate enough to get help with their down payment assistance from caring family members who are able to help them get into their own home. Your family members may be willing to help you reach the goal of buying your first home.

Research housing finance agencies. These agencies offer special mortgage loans for low and moderate-income homebuyers, buyers interested in renovating a residence within a targeted part of the city, and additional specific types of buyers as defined by the finance agency. With the help of a housing finance agency, you probably will receive an interest rate that is below market, down payment assistance and other incentives. Housing finance agencies can help eligible buyers with a reduced interest rate, help with your down payment, and provide other advantages. The central purpose of non-profit housing finance agencies is to boost the purchase of homes in particular parts of the city.

Explore no-down and low-down mortgage loans.

• FHA loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in assisting low to moderate-income families qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a loan. Interest rates for an FHA mortgage are typically the market interest rate, but the down payment requirements for an FHA loan will be smaller than those of conventional loans. Closing costs can be financed in the mortgage, and your down payment could be as low as 3% of the total amount.

• VA loans

  VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which generally offers a low fixed interest rate, no down payment, and reduced closing costs. While the mortgage loans are not actually provided by the VA, the department certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. In most cases the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. In contrast to the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  With a carry-back mortgage, the seller loans you part of his or her home equity. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Generally, this form of second mortgage will have higher interest.

No matter how you gather your down payment, the satisfaction of owning your own home will be just as great!

Want to discuss down payments? Call us: 305-967-7200.