Your Down Payment

Lots of borrowers qualify for several different kinds of mortgages, but they don't have a lot of cash to pay a down payment. Here are a few ideas:

Slash the budget and build up savings. Look for ways you can reduce your expenses to set aside funds for a down payment. There are bank programs through which a specific portion of your take-home pay is automatically deposited into savings each pay period. 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.

Sell items you do not really need and find a second job. Look for an additional job. This can be exhausting, but the temporary trial can help you get your down payment. You can also seriously consider the possessions you really need and the things you can sell. Multiple small items might add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Borrow money from a retirement plan. Investigate the parameters of your retirement program. Some people get down payment money from withdrawing what they need from IRAs or taking money out of their 401(k) plans. Be sure you understand about any penalties, the way this may affect on taxes, and repayment obligation.

Ask for assistance from generous family members. Many homebuyers somtimes receive down payment help from caring parents and other family members who may be willing to help get them in their first home. Your family members may be inclined to help you reach the goal of having your own home.

Learn about housing finance agencies. Special mortgage loans are offered to buyers in certain situations, such as low income homebuyers or future homeowners looking to remodel houses in a certain area, among others. Financing through this kind of agency, you can get an interest rate that is below market, down payment help and other benefits. Housing finance agencies can assist you with a reduced interest rate, help with your down payment, and offer other advantages. These non-profit agencies exist to build up community in specific areas.

Explore no-down and low-down mortgages.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low to moderate-income individuals qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, enabling new homebuyers who might not be eligible for a traditional mortgage loan, to receive a mortgage. Down payment totals for FHA loans are lower than those with conventional mortgage loans, although these loans come with average interest rates. Closing costs may be covered by the mortgage, while your down payment might be as low as 3% of the total amount.

• VA loans

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which generally offers a competitive fixed rate of interest, no down payment, and limited closing costs. Even though the mortgages aren't actually provided by the VA, the department verfifies applicants by providing eligibility certificates.

• Piggy-back loans

  You can finance a down payment using a second mortgage that closes with the first. Usually the piggyback loan is for 10 percent of the home's price, and the first mortgage finances 80 percent. Rather than the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to lend you a piece of his own equity to assist you with your down payment money. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Often, this kind of second mortgage will have higher interest.

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

Want to discuss down payments? Give us a call: 877-696-4687.