Your Down Payment

Lots of people who are looking to purchase a new home can easily qualify for various loan programs, but they can't afford a large down payment. Do you want to buy a new house, but aren't sure how to put together your down payment?

Cut expenses and save. Turn your budget upside-down to find ways you can cut expenses to go toward your down payment. You might also try enrolling in an automatic savings plan at your bank to have a portion of your pay automatically transferred into savings. You could look into some big expenses in your spending history that you can live without, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a family vacation.

Work a second job and sell things you do not need. Perhaps you can get an additional job and save your earnings. You can also seriously consider the possessions you actually need and the items you can put up for sale. Multiple small things can add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you own.

Borrow from retirement funds. Investigate the parameters of your retirement program. It is possible to pull out funds from a 401(k) plan for a down payment or withdraw from an Individual Retirement Account. Make sure to find out about the tax consequences, repayment terms, and possible early withdrawal penalties.

Ask for assistance from members of your family. Many homebuyers are often lucky enough to get down payment help from giving family members who are prepared to help get them in their first home. Your family members may be willing to help you reach the milestone of having your first home.

Research housing finance agencies. These agencies offer provisional loan programs for moderate and low income buyers, buyers interested in renovating a house in a particular area, and other groups as specified by the agency. Working with a housing finance agency, you can receive an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies can assist eligible buyers with a reduced rate of interest, help with your down payment, and provide other assistance. These non-profit programs to build up community in certain areas.

Explore no-down and low-down mortgage loan programs.

• FHA mortgage loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in assisting low to moderate-income individuals qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA helps first-time buyers and others who would not be able to qualify for a typical mortgage by themselves, by providing mortgage insurance to the private lenders. Interest rates for an FHA loan are typically the going interest rate, but the down payment with an FHA mortgage will be lower than those of conventional loans. Closing costs can be financed within the mortgage, and the down payment could be as low as 3% of the purchase price.

• VA loans

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which usually offers a low interest rate, no down payment, and limited closing costs. While the mortgages are not actually issued by the VA, the department certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  You may fund a down payment through a second mortgage that closes at the same time as the first. Most of the time, the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The borrower pays the remaining 10%, instead of come up with the typical 20% down payment.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to loan you a portion of his own equity to assist you with your down payment funds. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Often, this form of second mortgage has higher interest.

No matter how you gather your down payment, 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 at 303-523-7119.