Putting Together Your Down Payment

Lots of borrowers qualify for several different kinds of mortgages, but they can't afford a large down payment. Here are a few ways to get together a down payment

Tighten your belt and save. Turn your budget inside out to discover ways you can cut expenses to save for your down payment. You also could enroll in an automatic savings plan at your bank to have a portion of your payroll automatically transferred into savings. You might look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay close to home for your family vacation.

Work more and sell items you do not need. Maybe you can get a second job to get your down payment money. In addition, you can put together a comprehensive inventory of things you can sell. Broken gold jewelry can bring a good price from local jewelers. You may have collectibles you can put up for sale at an auction website, or quality household goods for a tag or garage sale. You can also explore what your investments could sell for.

Borrow from retirement funds. Check the provisions of your particular plan. You can borrow money from a 401(k) for you down payment or perform a withdrawal from an Individual Retirement Account. Be sure you are clear about any penalties, the way this will affect on taxes, and repayment obligation.

Ask for assistance from family members. First-time homebuyers sometimes receive help with their down payment assistance from thoughtful 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 buying your first home.

Contact housing finance agencies. Provisional mortgage loan programs are offered to homebuyers in certain circumstances, such as low income purchasers or people planning to improve homes in a specific place, among others. With the help of a housing finance agency, you can be given a below market interest rate, down payment help and other benefits. These kinds of agencies can assist eligible homebuyers with a reduced rate of interest, get you your down payment, and provide other assistance. These non-profit agencies to promote the value of homes in particular neighborhoods.

Explore no-down and low-down mortgage loans.

• Federal Housing Administration (FHA) mortgage loans

  The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in helping low to moderate-income buyers qualify for mortgage loans. Part 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, ensuring the buyers are eligible for a mortgage. Interest rates with an FHA loan are usually the market interest rate, while the down payment amounts with an FHA mortgage are lower than those of conventional loans. The down payment may go as low as 3 percent while the closing costs might be covered by the mortgage.

• VA mortgages

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterans and service people can get a VA loan, which typically offers a competitive fixed rate of interest, no down payment, and minimal closing costs. While the mortgages aren't actually provided by the VA, the department certifies applicants by providing eligibility certificates.

• Piggy-back loans

  You may fund your down payment using a second mortgage that closes with the first. Generally the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage finances 80 percent. Rather than the usual 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.

• Carry-Back loans

  In a "carry back" mortgage, the seller commits to loan you a portion of his own equity to assist you with your down payment money. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Typically you will pay a slightly higher rate on the loan financed by the seller.

Want to discuss your down payment? Give us a call: 727-290-6863.