Your Down Payment

Many buyers can qualify for a mortgage loan, but they don't have a lot of money to put up a down payment. Here are a few ways to get together a down payment

Tighten your belt and save. Scrutinize your budget to uncover 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 automatically have a specific amount from your take-home pay moved into your savings account. You would be wise to look into some big expenses in your budget that you can live without, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay close to home for your vacation.

Work more and sell items you don't need. Maybe you can get an additional job and build up your earnings. You can also get creative about the items you migh be able to sell. You might own collectibles you can put up for sale on an auction website, or quality household items for a garage or tag sale. Also, you can consider selling any investments you own.

Borrow your down payment from a retirement plan. Research the specifics for your individual plan. Some homebuyers get down payment money by withdrawing funds from IRAs or borrowing from 401(k) programs. Be sure to find out about the tax ramifications, repayment terms, and any early withdrawal penalties.

Ask for a generous gift from family. First-time buyers are sometimes lucky enough to get down payment assistance from thoughtful family members who may be willing to help them get into their first home. Your family members may be willing to help you reach the milestone of buying your own home.

Contact housing finance agencies. Special mortgage loans are given to homebuyers in certain circumstances, like low income homebuyers or people looking to improve homes in a specific area, among others. With the help of this kind of agency, you probably will get a below market interest rate, down payment help and other perks. Housing finance agencies may assist eligible homebuyers with a lower rate of interest, help with your down payment, and offer other benefits. The principal goal of non-profit housing finance agencies is boosting residence ownership in specific parts of the city.

Learn about low-down and no-down mortgage loan programs.

• 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 critical role in assisting low to moderate-income families get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in qualifying for mortgage loans. FHA offers mortgage insurance to private lenders, enabling homebuyers who will not qualify for a conventional mortgage loan, to get financing. Down payment requirements for FHA mortgages are smaller than those for traditional mortgages, even though these loans hold average rates of interest. The down payment may be as low as 3 percent while the closing costs might be financed in the mortgage.

• VA mortgages

  With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan does not require a down payment, has reduced closing costs, and provides a competitive rate of interest. While it's true that the mortgages don't originate from the VA, the department certifies applicants by issuing eligibility certificates.

• Piggy-back loans

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

• Carry-Back loans

  In a "carry back" agreement, the seller agrees to loan you a piece of his home equity to help you get your down payment money. In this scenario, you would finance the majority of the purchase price with a traditional lending institution and borrow the remainder from the seller. Typically, this type of second mortgage will have higher interest.

Want to discuss your down payment? Call us at 4693224391.