Your Down Payment

Many buyers qualify for various loan programs, but they don't have a lot of money to put up the standard down payment. Want to buy a new home, but aren't sure how you should put together a down payment?

Tighten your belt and save. Look for ways to reduce your expenditures to save toward a down payment. You may also decide to enroll in an automatic savings plan to have a portion of your pay automatically transferred into savings. You could look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you may move into less expensive housing, or stay local for your annual vacation.

Work more and sell things you do not need. Perhaps you can get an additional job and build up your earnings. In addition, you can put together an exhaustive list of items you may be able to sell. Unworn gold jewelry can be sold at local jewelry stores. Multiple small things could add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Tap into your retirement funds. Check the parameters of your retirement program. You may take out funds from a 401(k) plan for you down payment or make a withdrawal from an Individual Retirement Account. Be sure to find out about the tax ramifications, your obligation for repayment, and early withdrawal penalties.

Ask for assistance from generous members of your family. Many buyers somtimes receive help with their down payment assistance from gracious parents and other family members who may be eager to help get them in their own home. Your family members may be willing to help you reach the goal of buying your first home.

Research housing finance agencies. These types of agencies offer special mortgate loan programs to low and moderate-income borrowers, buyers with an interest in remodeling a residence in a particular part of the city, and other groups as specified by each finance agency. Working through a housing finance agency, you can receive an interest rate that is below market, down payment help and other perks. Housing finance agencies may help eligible buyers with a reduced rate of interest, get you your down payment, and provide other assistance. These non-profit programs to build up the value of homes in specific areas.

Explore no-down and low-down mortgage loans.

• FHA mortgages

  The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in aiding low and moderate-income families get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who need to qualify for mortgage loans. FHA aids first-time buyers and others who may not be eligible for a typical mortgage loan on their own, by providing mortgage insurance to lenders. Interest rates for an FHA mortgage generally feature the current interest rate, while the down payment for an FHA loan will be less than those of conventional loans. The down payment may go as low as 3 percent and the closing costs can be covered by the mortgage.

• VA mortgages

  VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which typically offers a reasonable rate of interest, no down payment, and reduced closing costs. While the mortgage loans aren't actually issued by the VA, the department verfifies borrowers by providing eligibility certificates.

• Piggy-back loans

  You can fund your down payment using a second mortgage that closes at the same time as the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. In contrast to the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.

• Carry-Back loans

  In the case of a seller "carrying back a second mortgage," the seller loans you part of his or her equity. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Generally, this type of second mortgage has higher interest.

Want to discuss your down payment? Call us: (818)645-7035.