Building Your Down Payment

Many borrowers can easily qualify for a mortgage loan, but they don't have a large sum of cash to put up a down payment. Want to buy a new house, but don't know how to put together a down payment?

Tighten your belt and save. Be on the look-out for ways you can trim your monthly expenditures to set aside funds for a down payment. You also might enroll in an automatic savings plan to automatically have a specific portion of your take-home pay deposited into a savings account. Some effective strategies to save additional funds include moving into a residence that is less expensive, and skipping a year's vacation.

Work a second job and sell things you do not need. Try to get a second job. This can be rough, but the temporary difficulty can help you get your down payment. In addition, you can make an exhaustive inventory of things you may be able to sell. Unworn gold jewelry can bring a good price from local jewelers. Maybe you have desirable items you can put up for sale at an auction website, or quality household items for a tag or garage sale. Also, you might want to think about selling any investments you hold.

Tap into retirement funds. Investigate the provisions of your particular program. Some people get down payment money by withdrawing from their Individual Retirement Accounts or borrowing from 401(k) programs. You will need to make sure you are knowledgable about any penalties, the effect this will have on income taxes, and repayment terms.

Ask for assistance from members of your family. Many homebuyers are often fortunate enough to receive help with their down payment help from giving parents and other family members who are prepared to help get them in their first home. Your family members may be eager to help you reach the milestone of having your first home.

Learn about housing finance agencies. These types of agencies offer provisional mortgage programs for moderate and low income buyers, buyers interested in sprucing up a residence in a specific part of the city, and other groups as specified by each agency. With the help of this type of agency, you can be given a below market interest rate, down payment help and other benefits. These types of agencies may help you with a lower rate of interest, help with your down payment, and provide other assistance. The central goal of non-profit housing finance agencies is promoting home ownership in particular areas.

Research no-down and low-down mortgages.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in aiding low and moderate-income buyers get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in qualifying for home financing. FHA provides mortgage insurance to the private lenders, enabling buyers who might not be eligible for a traditional mortgage loan, to get home financing. Interest rates for an FHA mortgage are generally the going interest rate, while the down payment requirements with an FHA loan will be lower than those of conventional loans. Closing costs might be covered by the mortgage, while your down payment might be as low as 3% of the purchase price.

• VA mortgages

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

• Piggy-back loans

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

• Carry-Back loans

  With a carry-back 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 finances the remaining funds with the seller. Typically you'll pay a somewhat higher interest rate on the loan financed by the seller.

No matter your method of getting together down payment funds, the satisfaction of living in your own home will be just as sweet!

Want to discuss the best options for down payments? Give us a call: 4058873713.