Your Down Payment

Many borrowers can easily qualify for various loan programs, but they can't afford a large down payment. Want to look into getting a new home, but aren't sure how to get together a down payment?

Tighten your belt and save. Look for ways to reduce your expenditures to put away money for a down payment. You might also try enrolling in an automatic savings plan at your bank to have a portion of your payroll automatically moved into your savings account. You could look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a vacation.

Sell things you don't need and get a part-time job. Maybe you can find a second job and save your earnings. You can also get serious about the possessions you actually need and the items you could be able to sell. Multiple small things could add up to a fair amount at a garage or tag sale. Also, you might want to look into selling any investments you hold.

Borrow from retirement funds. Explore the specifics for your particular plan. Many homebuyers get down payment money from withdrawing from Individual Retirement Accounts or getting money out of their 401(k) programs. You will need to make sure you are clear about any penalties, the effect this could have on taxes, and repayment terms.

Ask for help from family members. First-time buyers somtimes get help with their down payment help from giving family members who are able to help them get into their first home. Your family members may be happy at the chance to help you reach the goal of buying your own home.

Learn about housing finance agencies. Provisional loan programs are provided to buyers in certain circumstances, such as low income purchasers or future homeowners planning to remodel homes in a particular place, among others. Working through this type of agency, you may receive an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies can help you with a reduced rate of interest, help with your down payment, and offer other assistance. These non-profit programs exist to promote community in certain neighborhoods.

Find out about low-down and no-down mortgage loan programs.

• Federal Housing Administration (FHA) mortgages

  The Federal Housing Administration (FHA), which functions as 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) helps individuals get FHA provides mortgage insurance to the private lenders, enabling homebuyers who may not be eligible for a typical mortgage loan, to receive a mortgage. Down payment totals for FHA loans are smaller than those of typical mortgage loans, even though these mortgages hold current rates of interest. The required down payment can be as low as three percent while the closing costs can be financed in the mortgage loan.

• VA mortgage loans

  VA loans are backed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which typically offers a low fixed rate of interest, no down payment, and minimal closing costs. Although the mortgages don't originate from the VA, the office verfifies borrowers by issuing eligibility certificates.

• Piggy-back loans

  You may finance your down payment with a second mortgage that closes along with the first. Generally the piggyback loan is for 10 percent of the home's price, while the first mortgage covers 80 percent. The borrower covers the remaining 10%, rather than having to pull together the typical 20% down payment.

• Carry-Back loans

  In a "carry back" mortgage, the seller agrees to loan you a portion of his own equity to help you with your down payment funds. You would finance the majority of the purchase price with a traditional mortgage lending institution and finance the remaining amount with the seller. Usually this kind of second mortgage has a higher rate of interest.

No matter how you gather your down payment funds, the thrill of reaching the goal of living in your own home will be just as great!

Need to talk about down payments? Call us: (818)645-7035.