Putting Together Your Down Payment

Lots of people who are looking to purchase a new home qualify for a mortgage loan, but they don't have a lot of cash to pay the standard down payment. Below are a few straightforward methods that will help you put together a down payment

Cut expenses and save. Turn your budget upside-down to find ways you can cut expenses to save for your down payment. You could also decide to enroll in an automatic savings plan at your bank to have a portion of your pay automatically moved into savings. 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 decide to move into less expensive housing, or skip a vacation.

Work a second job and sell items you don't need. Perhaps you can find an additional job to get your down payment money. You can also get serious about the possessions you actually need and the things you may be able to put up for sale. Maybe you have collectibles you can put up for sale on an online auction, or quality household goods for a garage or tag sale. You could also research what any investments you own may sell for.

Tap into your retirement funds. Explore the details for your particular plan. Some homebuyers get down payment money by withdrawing funds from their IRAs or borrowing from their 401(k) plans. Make sure you understand about any penalties, the way this could affect on your income taxes, and repayment terms.

Ask for assistance from generous members of your family. First-time homebuyers are often fortunate enough to receive help with their down payment help from giving family members who may be eager to help get them in their own home. Your family members may be eager to help you reach the goal of buying your first home.

Research housing finance agencies. Provisional mortgage programs are offered to buyers in specific situations, such as low income homebuyers or people looking to remodel houses in a certain neighborhood, among others. Working with this type of agency, you may receive a below market interest rate, down payment help and other incentives. These types of agencies may help you with a lower interest rate, get you your down payment, and provide other advantages. These non-profit programs exist to promote home ownership in particular areas.

Research no-down and low-down mortgage loans.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low and moderate-income Americans qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to qualify for mortgages. FHA aids first-time homebuyers and others who might not be eligible for a traditional mortgage loan by themselves, by offering mortgage insurance to lenders. Down payment sums for FHA loans are below those for conventional mortgage loans, even though these loans hold current interest rates. The required down payment may go as low as three percent while the closing costs may be financed in the mortgage.

  • VA mortgages

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This specialized loan does not require a down payment, has reduced closing costs, and offers a competitive rate of interest. While the mortgages are not actually financed by the VA, the office verfifies applicants 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 is for 80% of the cost of the home and the "piggyback" is for 10%. Instead of the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.

  • Carry-Back loans

    In the option of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. The buyer funds the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a somewhat higher rate on the loan financed by the seller.

No matter your method of pulling together your down payment, the thrill of owning your own home will be just as sweet!

Need to talk about down payment options? Give us a call: 386-246-6322.

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