Building Your Down Payment

Lots of buyers can easily qualify for several different kinds of mortgages, but they don't have a large sum of cash to pay a down payment. Here's where you start

Slash your budget and build up savings. Scrutinize the budget to discover extra money to save for your down payment. There are bank programs through which some of your paycheck is automatically placed into savings each pay period. Some effective methods to save additional funds include moving into housing that is less expensive, and skipping a year's vacation.

Sell items you do not need and get a second job. Try to get a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. In addition, you can put together an exhaustive inventory of things you may be able to sell. Unworn gold jewelry can bring a good amount from local jewelers. A closetful of small things might add up to a nice sum at a garage or tag sale. Also, you might want to think about selling any investments you hold.

Borrow from your retirement funds. Explore the details for your individual plan. Many people get down payment money from withdrawing from Individual Retirement Accounts or borrowing from their 401(k) plans. Make sure you know about any penalties, the way this may affect on your taxes, and repayment terms.

Ask for a generous gift from family. First-time buyers are often fortunate enough to receive down payment assistance from caring family members who may be willing to help them get into their first home. Your family members may be eager to help you reach the goal of owning your own home.

Research housing finance agencies. Provisional loan programs are provided to buyers in certain circumstances, like low income purchasers or future homeowners planning to renovating homes in a specific area, among others. With the help of this kind of agency, you can be given an interest rate that is below market, down payment assistance and other benefits. These types of agencies may help you with a lower interest rate, get you your down payment, and provide other benefits. The main purpose of not-for-profit housing finance agencies is boosting the purchase of homes in specific parts of the city.

Explore no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low and moderate-income buyers get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time buyers and others who might not be able to qualify for a traditional mortgage by themselves, by offering mortgage insurance to the lenders. Interest rates for an FHA loan are normally the going interest rate, but the down payment amounts for an FHA loan will be lower than those of conventional loans. Closing costs may be financed in the mortgage, and your down payment could be as low as 3 percent of the total.

• VA mortgage loans

  Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This particular loan requires no down payment, has limited closing costs, and provides the advantage of a competitive rate of interest. Although the VA doesn't finance the loans, it does issue a certificate of eligibility to apply for a VA loan.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close with the first. Most of the time, the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, instead of come up with the usual 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to lend you part of his own equity to assist you with your down payment funds. The buyer finances the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a slightly higher rate on the loan from the seller.

No matter your strategy of getting together your down payment, the satisfaction of reaching the goal of living in your own home will be just as sweet!

Want to discuss down payment options? Give us a call at 816-554-9696.