Putting Together Your Down Payment

Lots of folks who would like to buy a new house qualify for various loan programs, but they don't have a lot of cash to put up the standard down payment. Here are a few straightforward methods that will help you get together your down payment

Tighten your belt and save. Turn your budget upside-down to discover ways you can cut expenses to save for your down payment. Also, you can look into bank programs in which some of your paycheck is automatically deposited into savings each pay period. Some effective strategies to save additional funds include moving into housing that is less expensive, and skipping your vacation for a year or two.

Work more and sell items you do not need. Perhaps you can get a second job to get your down payment money. You can also get serious about the possessions you actually need and the things you may be able to put up for sale. Multiple small items might add up to a fair amount at a garage or tag sale. You could also explore what your investments will bring if sold.

Tap into your retirement funds. Explore the details for your particular plan. You can take out funds from a 401(k) plan for you down payment or make a withdrawal from an Individual Retirement Account. Be sure to learn about the tax consequences, your obligation for repayment, and early withdrawal penalties.

Ask for assistance from generous members of your family. First-time homebuyers somtimes get help with their down payment assistance from giving family members who are eager to help them get into their own home. Your family members may be inclined to help you reach the milestone of having your first home.

Contact housing finance agencies. Special mortgage programs are offered to homebuyers in certain circumstances, such as low income homebuyers or future homeowners planning to remodel houses in a targeted area, among others. Working with this kind of agency, you may receive an interest rate that is below market, down payment assistance and other advantages. These types of agencies may help you with a lower interest rate, help with your down payment, and offer other benefits. The principal purpose of non-profit housing finance agencies is promoting the purchase of homes in targeted places.

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

• FHA mortgages

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in helping low to moderate-income buyers get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgage loans. FHA offers mortgage insurance to the private lenders, helping the buyers to become eligible for a mortgage. Interest rates with an FHA mortgage are typically the current interest rate, but the down payment with an FHA loan are lower than those of conventional loans. Closing costs might be financed in the mortgage, while the down payment could be as low as 3% of the total amount.

• VA mortgages

  Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This specialized loan requires no down payment, has reduced closing costs, and provides the advantage of a competitive interest rate. While the loans are not actually issued by the VA, the department certifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  You may finance your down payment with a second mortgage that closes at the same time as the first. Generally the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage covers 80 percent. Instead of the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.

• Carry-Back loans

  In the case of a seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. The buyer finances most of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Typically, this kind of second mortgage has a higher rate of interest.

No matter your method of pulling together your down payment funds, the thrill of reaching the goal of living in your own home will be just as great!

Want to discuss the best options for down payments? Call us at (773) 774-9040 Ext 121.