Building Your Down Payment

Many folks who would like to buy a new home can qualify for several different kinds of mortgages, but they don't have a lot of money to pay the standard down payment. Do you want to look into getting a new house, but aren't sure how to get together a down payment?

Slash the budget and build up savings. Scrutinize your budget to discover ways you can cut expenses to go toward your down payment. You also might enroll in an automatic savings plan to have a percentage of your pay automatically moved into your savings account. Some practical strategies to save additional funds include moving into less expensive housing, and staying home for your vacation this year.

Sell things you do not need and find a part-time job. Perhaps you can get an additional job and build up your earnings. Additionally, you can make a comprehensive inventory of items you can sell. Unworn gold jewelry can bring a good amount from local jewelry stores. You may own collectibles you can put up for sale on an auction website, or household items for a garage or tag sale. You might also explore what your investments could bring if sold.

Tap into your retirement funds. Research the specifics of your individual plan. Some people get down payment money by withdrawing from IRAs or borrowing from their 401(k) programs. You will want to be sure you are knowledgable about any penalties, the effect this may have on your income taxes, and repayment terms.

Ask for help from family members. First-time buyers somtimes receive down payment help from thoughtful parents and other family members who are anxious to help them get into their first home. Your family members may be inclined to help you reach the goal of buying your own home.

Research housing finance agencies. These types of agencies provide special mortgage loans to moderate and low income borrowers, buyers with an interest in remodeling a house within a targeted part of the city, and other certain types of buyers as defined by the agency. Working through this kind of agency, you may be given a below market interest rate, down payment help and other incentives. Housing finance agencies can assist you with a lower interest rate, get you your down payment, and offer other benefits. These non-profit agencies to build up community in certain neighborhoods.

Find out about low-down and no-down mortgage loan programs.

• FHA mortgages

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in assisting low to moderate-income families get 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, making the buyers eligible for a mortgage. Interest rates with an FHA loan are generally the market interest rate, while the down payment requirements with an FHA mortgage will be lower than those of conventional loans. Closing costs can be included in the mortgage, and your down payment might be as low as 3 percent of the total.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan does not require a down payment, has mimimal closing costs, and provides the benefit of a competitive interest rate. Although the mortgages are not actually financed by the VA, the department verfifies applicants by issuing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close at the same time as the first. Usually the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. Instead of the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" situation, the seller commits to lend you part of his home equity to help you get your down payment funds. You would borrow the largest portion of the purchase price from a traditional lender and borrow the remainder from the seller. Typically you will pay a slightly higher rate on the loan financed by the seller.

Want to discuss down payment options? Give us a call at 866-300-1550.