Putting Together Your Down Payment

Many people who are looking to purchase a new house can qualify for several different kinds of mortgages, but they don't have much to pay a down payment. Here's where to get started

Tighten your belt and save. Look for ways to trim your monthly expenses to set aside funds for a down payment. There are bank programs in which a specific portion of your paycheck is automatically transferred into a savings account each pay period. You could look into some big expenses in your spending history that you can live without, or reduce, at least temporarily. For example, you may move into less expensive housing, or skip a vacation.

Sell items you do not really need and get a part-time job. Try to get a second job. This can be rough, but the temporary trial can provide your down payment money. In addition, you can put together an exhaustive inventory of items you may be able to sell. Unused gold jewelry can be sold at local jewelers. Multiple small things can add up to a fair amount at a garage or tag sale. Also, you might want to look into selling any investments you own.

Tap into retirement funds. Investigate the parameters of your retirement plan. Many people get down payment money by withdrawing funds from their IRAs or getting money out of their 401(k) plans. Be sure to ask your plan representative about the tax ramifications, your obligation for repaying funds, and penalties for withdrawing early.

Ask for help from generous family members. Many homebuyers somtimes get down payment help from thoughtful parents and other family members who may be anxious to help them get into their own home. Your family members may be willing to help you reach the goal of owning your first home.

Learn about housing finance agencies. These types of agencies offer special mortgage loans for moderate and low income borrowers, buyers with an interest in sprucing up a house in a targeted part of the city, and other certain kinds of buyers as defined by each agency. With the help of a housing finance agency, you probably will be given an interest rate that is below market, down payment help and other advantages. Housing finance agencies can assist you with a lower interest rate, get you your down payment, and provide other advantages. The central goal of non-profit housing finance agencies is boosting residence ownership in certain areas.

Learn about low-down and no-down mortgage loans.

• Federal Housing Administration (FHA) loans

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low and moderate-income families get mortgages. Part of the U.S. 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 loan. Interest rates with an FHA loan are usually the market interest rate, but the down payment with an FHA mortgage are less than those of conventional loans. Closing costs might be financed in the mortgage, and the down payment might be as low as 3% of the total.

• VA loans

  Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This special loan requires no down payment, has reduced closing costs, and provides the advantage of a competitive interest rate. Even though the VA does not actually finance the mortgage loans, it does certify eligibility to apply for a VA mortgage.

• Piggy-back loans

  A piggy-back loan is a second mortgage that you close along with the first. Usually the piggyback loan is for 10 percent of the home's amount, while the first mortgage covers 80 percent. Instead of 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 portion of his own equity to help you with your down payment funds. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Usually you'll pay a somewhat higher rate on the loan financed by the seller.

No matter your strategy of putting together your down payment, the thrill of reaching the goal of owning your own home will be just as sweet!

Want to discuss the best options for down payments? Call us: 561-395-4264.