Your Down Payment

Many borrowers can qualify for various loan programs, but they can't afford a large down payment. Do you want to buy a new house, but aren't sure how you should get together your down payment?

Cut expenses and save. Scrutinize your budget to find extra money to go toward your down payment. You also could enroll in an automatic savings plan at your bank to automatically have a predetermined amount from your paycheck moved into a savings account. You could look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a family vacation.

Work a second job and sell things you do not need. Perhaps you can find a second job to get your down payment money. You can also get creative about the items you may be able to put up for sale. You may own collectibles you can put up for sale on an auction website, or quality household goods for a garage or tag sale. You might also look into what your investments could bring if sold.

Borrow funds from your retirement plan. Check the parameters of your specific plan. It is possible to take out money from a 401(k) for you down payment or withdraw from an IRA. Be sure you are clear about any penalties, the way this could affect on taxes, and repayment terms.

Ask for assistance from family members. First-time homebuyers somtimes receive down payment help from caring family members who are willing to help them get into their first home. Your family members may be willing to help you reach the milestone of buying your first home.

Learn about housing finance agencies. These types of agencies offer provisional mortgate loan programs- for low and moderate-income borrowers, buyers interested in sprucing up a home in a particular area, and additional particular kinds of buyers as defined by the agency. Financing through a housing finance agency, you probably will be given a below market interest rate, down payment assistance and other incentives. These kinds of agencies may assist you with a lower rate of interest, help with your down payment, and offer other benefits. The primary mission of not-for-profit housing finance agencies is build up home ownership in certain areas.

Research no-down and low-down mortgages.

• FHA mortgages

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a critical part in aiding low and moderate-income individuals get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in qualifying for mortgages. FHA provides mortgage insurance to private lenders, enabling new homebuyers who will not qualify for a conventional mortgage, to obtain a mortgage. Down payment totals for FHA mortgages are lower than those of traditional mortgage loans, even though these loans come with average interest rates. The down payment can be as low as three percent while the closing costs could be financed in the mortgage loan.

• VA mortgages

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a reasonable interest rate, no down payment, and minimal closing costs. While the VA does not finance the mortgage loans, it does issue a certificate of eligibility to qualify for a VA loan.

• Piggy-back loans

  You may fund your down payment through a second mortgage that closes at the same time as the first. Generally the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, instead of needing to put together the typical 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to lend 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 lender and finance the remainder with the seller. Usually you will pay a slightly higher interest rate on the loan from the seller.

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

Want to discuss down payment options? Give us a call: 757-873-1287.