Putting Together Your Down Payment

Many buyers qualify for a loan, but they don't have much to pay a down payment. Here are a few straightforward ways to get together your down payment

Slash your budget and build up savings. Scrutinize the budget to discover extra money to save for your down payment. Also, you can look into bank programs through which some of your take-home pay is automatically transferred into savings every pay period. Some effective approaches to put together funds include moving into less expensive housing, and skipping your family vacation for a year or two.

Work more and sell items you don't need. Perhaps you can find an additional job to get your down payment money. You can also seriously consider the possessions you actually need and the items you can put up for sale. A closetful of small things could add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you own.

Borrow money from your retirement plan. Research the specifics of your individual plan. Some people get down payment money from withdrawing from Individual Retirement Accounts or borrowing from their 401(k) plans. Be sure to ask your plan representative about the tax consequences, your obligation for repayment, and possible early withdrawal penalties.

Ask for assistance from family members. First-time homebuyers are sometimes fortunate enough to receive down payment help from caring family members who are eager to help them get into their own home. Your family members may be pleased at the chance to help you reach the milestone of owning your own home.

Learn about housing finance agencies. These agencies offer provisional mortgage loans for low and moderate-income buyers, buyers with an interest in renovating a house in a specific area, and other particular kinds of buyers as specified by the agency. With the help of a housing finance agency, you may get an interest rate that is below market, down payment help and other perks. These kinds of agencies can help you with a lower rate of interest, get you your down payment, and offer other assistance. These non-profit programs to promote community in specific neighborhoods.

Explore no-down and low-down mortgages.

• FHA mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low to moderate-income Americans get mortgages. Part 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 financing. Interest rates with an FHA loan typically feature the going interest rate, but the down payment requirements for an FHA loan will be smaller than those of conventional loans. The required down payment can go as low as 3 percent while the closing costs could be financed in the mortgage loan.

• VA mortgage loans

  VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which typically offers a low rate of interest, no down payment, and minimal closing costs. While the mortgage loans are not actually issued by the VA, the department certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  A piggy-back loan is a second mortgage that closes at the same time as the first. Usually the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of having to put together the typical 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller commits to loan you some of his own equity to help you get your down payment funds. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lending institution and finance the remaining amount with the seller. Usually you'll pay a slightly higher interest rate with the loan from the seller.

No matter how you gather your down payment money, the satisfaction of reaching the goal of living in your own home will be just as sweet!

Need to talk about down payment options? Give us a call at 714-970-9700.