Putting Together Your Down Payment

Many folks who would like to purchase a new home qualify for various loan programs, but they don't have a large sum of cash to pay a down payment. Here are a few methods that will help you put together a 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. Also, you can look into bank programs in which a specific portion of your take-home pay is automatically deposited into a savings account each pay period. Some effective ways to build up funds include moving into less expensive housing, and staying local for your family vacation this year.

Work a second job and sell things you do not need. Try to get a second job. This can be rough, but the temporary difficulty can help you get your down payment. Additionally, you can put together an exhaustive inventory of items you can sell. Unworn gold jewelry can be sold at local jewelers. Maybe you own collectibles you can sell on an auction website, or household goods for a tag or garage sale. You could also look into what your investments will sell for.

Borrow your down payment from a retirement plan. Explore the details of your individual plan. It is possible to borrow money from a 401(k) plan for a down payment or make a withdrawal from an Individual Retirement Account. Be sure to ask your plan representative about the tax ramifications, your obligation for repaying the money, and penalties for withdrawing early.

Ask for assistance from members of your family. Many buyers are often lucky enough to receive help with their down payment assistance from gracious parents and other family members who are able to help them get into their first home. Your family members may be willing to help you reach the milestone of owning your own home.

Contact housing finance agencies. These types of agencies provide provisional mortgage programs for moderate and low income borrowers, buyers interested in sprucing up a house in a targeted area, and additional groups as defined by each agency. Working with a housing finance agency, you may get a below market interest rate, down payment assistance and other advantages. Housing finance agencies can help eligible homebuyers with a lower interest rate, help with your down payment, and provide other assistance. These non-profit programs to boost the value of homes in specific areas.

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

• 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 assisting low to moderate-income individuals get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting mortgages. FHA aids first-time homebuyers and others who might not be able to qualify for a conventional mortgage by themselves, by providing mortgage insurance to lenders. Interest rates with an FHA mortgage are usually the market interest rate, but the down payment amounts with an FHA loan will be less than those of conventional loans. The required down payment can go as low as 3 percent while the closing costs may be covered by the mortgage loan.

• VA loans

  VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can get a VA loan, which typically offers a competitive rate of interest, no down payment, and limited closing costs. While the mortgages are not actually financed by the VA, the office certifies applicants by providing eligibility certificates.

• Piggy-back loans

  You may finance a down payment with a second mortgage that closes at the same time as the first. Usually the piggyback loan is for 10 percent of the home's price, while the first mortgage finances 80 percent. The borrower covers the remaining 10%, rather than putting the usual 20% down payment.

• Carry-Back loans

  In a "carry back" situation, the seller agrees to loan you part of his own equity to assist you with your down payment money. In this scenario, you would borrow the largest portion of the purchase price from a traditional lender and borrow the remainder from the seller. Typically you'll pay a somewhat higher interest rate on the loan from the seller.

No matter your method of pulling together your down payment funds, the satisfaction of owning your own home will be just as great!

Need to talk about your down payment? Give us a call: (818)645-7035.