Your Down Payment

Lots of buyers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to buy a new home, but aren't sure how you should get together your down payment?

Tighten your belt and save. Be on the look-out for ways to trim your monthly expenditures to put away money for a down payment. There are bank programs in which a specific portion of your paycheck is automatically transferred into a savings account every pay period. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a vacation.

Sell items you don't need and find a part-time job. Try to find an additional job. This can be rough, but the temporary trial can help you get your down payment. In addition, you can put together an exhaustive inventory of things you can sell. Unworn gold jewelry can be sold at local jewelry stores. A closetful of small items could add up to a fair amount at a garage or tag sale. You might also look into what your investments may sell for.

Borrow from your retirement funds. Research the specifics of your particular plan. It is possible to pull out money from a 401(k) plan for a down payment or withdraw from an Individual Retirement Account. Be sure you understand about any penalties, the effect this will have on income taxes, and repayment terms.

Ask for a gift from your family. First-time homebuyers are sometimes lucky enough to get help with their down payment assistance from caring parents and other family members who are able 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.

Learn about housing finance agencies. Special loan programs are extended to homebuyers in specific situations, like low income buyers or people looking to improve houses in a specific area, among others. Financing with a housing finance agency, you may get a below market interest rate, down payment help and other advantages. Housing finance agencies may assist you with a reduced interest rate, help with your down payment, and provide other assistance. The principal purpose of non-profit housing finance agencies is build up the purchase of homes in particular areas.

Find out about low-down and no-down mortgage loans.

• Federal Housing Administration (FHA) 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 helping low to moderate-income families qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in qualifying for mortgage loans. FHA provides mortgage insurance to the private lenders, making the buyers eligible for a mortgage. Interest rates for an FHA loan normally feature the current interest rate, while the down payment for an FHA loan will be below those of conventional loans. The required down payment can go as low as 3 percent while the closing costs may be packaged in the mortgage.

• VA mortgages

  VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans qualify for a VA loan, which typically offers a low rate of interest, no down payment, and minimal closing costs. Although the VA doesn't issue the mortgage loans, it does issue a certificate of eligibility to qualify for a VA loan.

• 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 is for 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than putting the usual 20% down payment.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. In this scenario, you would finance the largest portion of the purchase price with a traditional lending institution and finance the remainder with the seller. Generally, this type of second mortgage will have higher interest.

No matter your method of getting together your down payment, the satisfaction of owning your own home will be just as great!

Want to discuss the best options for down payments? Call us at 832-407-2668.