Building Your Down Payment

Lots of people who are looking to purchase a new home can easily qualify for various loan programs, but they don't have a lot of cash to pay a down payment. Here are a few straightforward methods that will help you put together your down payment

Slash your budget and build up savings. Scrutinize the budget to uncover ways you can cut expenses to go toward your down payment. There are bank programs in which a portion of your take-home pay is automatically placed into savings each pay period. Some effective ways to put together funds include moving into less expensive housing, and staying home for your vacation this year.

Sell things you don't need and get a part-time job. Maybe you can get an additional job and build up your earnings. In addition, you can put together an exhaustive inventory of items you can sell. Broken gold jewelry can bring a good amount from local jewelry stores. Multiple small items can add up to a fair amount at a garage or tag sale. Also, you can consider selling any investments you own.

Borrow from a retirement plan. Research the specifics for your particular plan. You may take out funds from a 401(k) plan for you down payment or perform a withdrawal from an IRA. Be sure you know about any penalties, the way this could affect on your taxes, and repayment obligation.

Ask for a generous gift from your family. First-time homebuyers somtimes receive down payment assistance from giving family members who may be willing to help them get into their own home. Your family members may be inclined to help you reach the goal of buying your first home.

Research housing finance agencies. Provisional mortgage loans are extended to buyers in specific situations, like low income homebuyers or future homeowners looking to improve houses in a specific neighborhood, among others. Financing with a housing finance agency, you may get an interest rate that is below market, down payment help and other perks. These kinds of agencies can help you with a lower rate of interest, help with your down payment, and provide other advantages. The primary mission of not-for-profit housing finance agencies is to boost home ownership in targeted places.

Find out about low-down and no-down mortgages.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low and moderate-income families qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA assists first-time buyers and others who might not be able to qualify for a conventional mortgage on their own, by providing mortgage insurance to private lenders. Interest rates for an FHA loan are normally the current interest rate, while the down payment with an FHA mortgage will be lower than those of conventional loans. The required down payment may be as low as three percent while the closing costs can be financed in the mortgage.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan requires no down payment, has reduced closing costs, and provides the advantage of a competitive interest rate. Although the mortgage loans are not actually issued by the VA, the department verfifies applicants by issuing eligibility certificates.

  • Piggy-back loans

    You can finance your down payment using a second mortgage that closes along with the first. Generally the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of come up with the usual 20% down payment.

  • Carry-Back loans

    In a "carry back" situation, the seller commits to loan you part of his own equity to help you with your down payment money. The buyer funds the highest percentage of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually this type of second mortgage will have higher interest.

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

Need to talk about down payments? Call us: 503-657-3311.