Putting Together Your Down Payment

Lots of buyers qualify for various loan programs, but they don't have much to pay a down payment. Here are a few tips:

Cut expenses and save. Be on the look-out for ways to trim your monthly expenses to save toward a down payment. There are bank programs in which some of your take-home pay is automatically transferred into a savings account each pay period. Some practical strategies to save additional funds include moving into less expensive housing, and staying home for your family vacation for a year or two.

Sell items you don't need and get a second job. Maybe you can get an additional job and build up your earnings. You can also get serious about the possessions you actually need and the items you can put up for sale. A closetful of small items can add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you own.

Tap into retirement funds. Check the provisions of your particular plan. It is possible to borrow money from a 401(k) for a down payment or perform a withdrawal from an Individual Retirement Account. Make sure you understand about any penalties, the effect this will have on your income taxes, and repayment terms.

Request a generous gift from your family. Many homebuyers are often lucky enough to receive help with their down payment assistance from caring family members who are prepared to help them get into their own home. Your family members may be willing to help you reach the goal of owning your own home.

Learn about housing finance agencies. These types of agencies offer special mortgage programs to moderate and low income borrowers, buyers interested in remodeling a residence within a targeted part of the city, and other groups as defined by the agency. Working with this kind of agency, you can be given a below market interest rate, down payment assistance and other incentives. Housing finance agencies may help eligible homebuyers with a reduced interest rate, help with your down payment, and provide other advantages. These non-profit agencies exist to promote home ownership in specific neighborhoods.

Explore no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income individuals qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for a mortgage. Down payment amounts for FHA loans are below those of traditional mortgage loans, even though these mortgages hold current rates of interest. The required down payment may go as low as 3 percent and the closing costs may be financed in the mortgage.

• 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 low interest rate, no down payment, and reduced closing costs. While the mortgages don't originate from the VA, the office certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  You may fund a down payment using a second mortgage that closes along with the first. Generally the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. Instead of the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.

• Carry-Back loans

  We a seller carries back a second mortgage, the you borrow a portion of the seller's home equity.. You would borrow the largest portion of the purchase price from a traditional lending institution and borrow the remaining amount from the seller. Usually this type of second mortgage will have higher interest.

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

Need to talk about your down payment? Give us a call: 9018401400.