Putting Together Your Down Payment

Many people who are looking to purchase a new home can easily qualify for various loan programs, but they don't have a lot of cash to pay a down payment. Want to buy a new home, but don't know how to get together a down payment?

Reduce expenses and save. Turn your budget upside-down to find extra money to save for your down payment. You could also try enrolling in an automatic savings plan to have a percentage of your payroll automatically deposited into your savings account. Some practical approaches to put together funds include moving into less expensive housing, and skipping your vacation for a year or two.

Sell items you do not need and find a part-time job. Look for a second job. This can be exhausting, but the temporary trial can help you get your down payment. You can also get serious about the possessions you actually need and the things you can put up for sale. A closetful of small things may add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you hold.

Tap into retirement funds. Investigate the parameters of your particular program. It is possible to pull out money from a 401(k) for you down payment or perform a withdrawal from an IRA. Be sure you comprehend the tax consequences, your obligation for repayment, and penalties for withdrawing early.

Request a gift from your family. Many homebuyers are often lucky enough to receive down payment help from thoughtful parents and other 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 milestone of buying your first home.

Contact housing finance agencies. Special mortgage programs are offered to buyers in certain circumstances, like low income purchasers or people planning to improve homes in a certain area, among others. With the help of this kind of agency, you probably will receive an interest rate that is below market, down payment help and other incentives. These types of agencies can assist you with a lower interest rate, get you your down payment, and provide other benefits. The central goal of non-profit housing finance agencies is to promote the purchase of homes in specific parts of the city.

Find out about low-down and no-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 part in aiding low and moderate-income individuals get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who need to get mortgages. FHA offers mortgage insurance to the private lenders, helping the buyers to become eligible for a mortgage. Interest rates with an FHA loan usually feature the current interest rate, while the down payment with an FHA loan will be below those of conventional loans. The down payment can go as low as 3 percent while the closing costs may be included in the mortgage.

• VA loans

  VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can qualify for a VA loan, which typically offers a competitive rate of interest, no down payment, and limited closing costs. While the VA doesn't issue the mortgage loans, it does issue a certificate of eligibility to qualify for a VA mortgage.

• Piggy-back loans

  You can fund your down payment using a second mortgage that closes with the first. In most cases 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 seller loans you part of his or her equity. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Usually you'll pay a slightly higher rate with the loan financed by the seller.

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

Want to discuss down payment options? Give us a call: 954.920.9799.