Your Down Payment

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Lots of borrowers qualify for a loan, but they can't afford a large down payment. Do you want to buy a new house, but aren't sure how you should put together your down payment?

Reduce expenses and save. Look for ways to trim your expenditures to put away money for a down payment. You also might enroll in an automatic savings plan at your bank to automatically have a set portion of your paycheck moved into a savings account. Some effective methods to save additional funds include moving into a residence that is less expensive, and staying local for your vacation this year.

Sell items you do not really need and find a part-time job. Try to get a second job. This can be rough, but the temporary difficulty can provide your down payment money. Additionally, you can make a comprehensive list of things you may be able to sell. Unused gold jewelry can be sold at local jewelers. You may own desirable items you can put up for sale on an online auction, or household goods for a garage or tag sale. Also, you might want to consider selling any investments you hold.

Borrow from a retirement plan. Check the provisions of your retirement program. Some homebuyers get down payment money from withdrawing what they need from IRAs or borrowing from their 401(k) plans. Make sure to find out about the tax consequences, repayment terms, and any early withdrawal penalties.

Request a generous gift from your family. Many homebuyers are often fortunate enough to receive help with their down payment help from caring parents and other family members who may be prepared to help them get into their first home. Your family members may be pleased to help you reach the milestone of owning your own home.

Learn about housing finance agencies. Provisional mortgage loans are offered to buyers in specific circumstances, such as low income purchasers or homebuyers looking to renovating homes in a particular neighborhood, among others. With the help of this type of agency, you probably will receive an interest rate that is below market, down payment assistance and other perks. These kinds of agencies can assist you with a reduced rate of interest, get you your down payment, and offer other benefits. The central goal of non-profit housing finance agencies is promoting residence ownership in certain places.

Research no-down and low-down mortgages.

• FHA mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low to moderate-income Americans get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to get mortgages. FHA aids first-time homebuyers and others who would not be eligible for a typical mortgage by themselves, by providing mortgage insurance to lenders. Interest rates for an FHA loan are typically the current interest rate, but the down payment requirements with an FHA mortgage are less than those of conventional loans. The down payment can be as low as three percent and the closing costs can be financed in the mortgage.

• VA mortgage loans

  VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which generally offers a reasonable fixed interest rate, no down payment, and minimal closing costs. While the mortgages don't originate from the VA, the department verifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  You can finance a down payment with a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan is for 10 percent of the home's price, while the first mortgage finances 80 percent. In contrast to the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In a "carry back" agreement, the seller commits to lend you part of his own equity to help you get your down payment money. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Usually you'll pay a slightly higher interest rate with the loan financed by the seller.

Want to discuss down payments? Call us at 512-592-5462.