Building Your Down Payment

Many people who are looking to purchase a new home can qualify for a loan, but they don't have a lot of cash to pay the standard down payment. Want to look into getting a new home, but aren't sure how to get together a down payment?

Reduce expenses and save. Scrutinize your budget to discover ways you can cut expenses to save for your down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a specific portion of your paycheck moved into your savings account. You might look into some big expenses in your spending history that you can give up, or trim, at least temporarily. For example, you might move into less expensive housing, or stay close to home for your vacation.

Work more and sell items you don't need. Perhaps you can get an additional job to get your down payment money. You can also get serious about the possessions you actually need and the items you migh be able to sell. You may have collectibles you can sell at an auction website, or quality household items for a garage or tag sale. Also, you can think about selling any investments you own.

Borrow from your retirement funds. Investigate the provisions of your retirement program. Some people get down payment money from withdrawing from IRAs or getting funds out of their 401(k) plans. Make sure you know about any penalties, the way this will affect on your taxes, and repayment obligation.

Ask for assistance from generous family members. Many buyers somtimes receive help with their down payment help from caring parents and other family members who may be eager to help get them in their first home. Your family members may be willing to help you reach the milestone of owning your own home.

Learn about housing finance agencies. Special mortgage loans are provided to buyers in specific circumstances, such as low income homebuyers or people planning to renovating houses in a targeted place, among others. With the help of this kind of agency, you can get an interest rate that is below market, down payment assistance and other advantages. These types of agencies may assist you with a lower interest rate, get you your down payment, and offer other benefits. The primary purpose of non-profit housing finance agencies is build up residence ownership in certain places.

Research no-down and low-down mortgages.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low and moderate-income families qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to private lenders, enabling buyers who will not be eligible for a conventional mortgage, to get financing. Down payment totals for FHA mortgages are lower than those with conventional mortgages, even though these loans hold average rates of interest. The required down payment can go as low as 3 percent and the closing costs can be packaged in the mortgage.

  • VA mortgage loans

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan requires no down payment, has mimimal closing costs, and provides the benefit of a competitive interest rate. While the loans aren't actually issued by the VA, the department verfifies borrowers 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. Most of the time, the piggyback loan takes care of 10 percent of the purchase price, while the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the buyer just has to cover the remaining 10 percent.

  • Carry-Back loans

    In a "carry back" situation, the seller agrees to lend you part of his own equity to help you get your down payment funds. The buyer funds the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually this type of second mortgage will have a higher rate of interest.

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

Want to discuss the best options for down payments? Give us a call at (434) 975-5626.