Putting Together Your Down Payment

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Lots of borrowers qualify for various loan programs, but they don't have much to put up the standard down payment. Want to look into getting a new house, but aren't sure how to get together your down payment?

Cut expenses and save. Scrutinize the budget to uncover ways you can cut expenses to go toward your down payment. Also, you can look into bank programs in which some of your take-home pay is automatically deposited into a savings account each pay period. You could look into some big expenses in your spending history that you can live without, or trim, at least temporarily. For example, you might move into less expensive housing, or skip a family vacation.

Work more and sell items 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 put together an exhaustive list of things you can sell. Unworn gold jewelry can bring a good amount from local jewelry stores. Multiple small things could add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you own.

Borrow funds from your retirement plan. Check the provisions of your particular program. It is possible to borrow funds from a 401(k) plan for you down payment or withdraw from an IRA. Be sure you know about any penalties, the way this will affect on your income taxes, and repayment obligation.

Ask for assistance from generous family members. First-time homebuyers are often fortunate enough to receive down payment help from gracious family members who are prepared to help get them in their own home. Your family members may be eager to help you reach the milestone of buying your own home.

Contact housing finance agencies. Provisional loan programs are extended to homebuyers in specific situations, such as low income homebuyers or future homeowners looking to improve houses in a particular place, among others. With the help of this type of agency, you can receive an interest rate that is below market, down payment help and other advantages. Housing finance agencies may help eligible buyers with a lower interest rate, get you your down payment, and offer other benefits. These non-profit programs exist to boost the value of homes in specific areas.

Learn about low-down and no-down mortgage loans.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low and moderate-income individuals get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time homebuyers and others who would not be eligible for a typical mortgage loan on their own, by providing mortgage insurance to private lenders. Down payment sums for FHA loans are lower than those for typical mortgage loans, although these mortgages come with average rates of interest. The required down payment may go as low as 3 percent and the closing costs may be covered by the mortgage loan.

• VA mortgage loans

  VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans are eligible for a VA loan, which generally offers a low rate of interest, no down payment, and reduced closing costs. Even though the VA does not issue the mortgage loans, it does issue a certificate of eligibility to apply for a VA mortgage.

• Piggy-back loans

  You may finance a down payment using a second mortgage that closes along with the first. Generally the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than come up with the usual 20% down payment.

• Carry-Back loans

  In the case of the seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Generally, this form of second mortgage will have higher interest.

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

Want to discuss down payment options? Call us at 954-359-3000.