Putting Together Your Down Payment

Many borrowers qualify for several different kinds of mortgages, but they don't have a lot of money to put up a down payment. Here are a few methods that will help you put together your down payment

Reduce expenses and save. Look for ways you can reduce your monthly expenses to save toward a down payment. There are bank programs through which some of your take-home pay is automatically deposited into a savings account each pay period. You might look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you may decide to move into less expensive housing, or stay close to home for your vacation.

Work more and sell things you do not need. Look for a second job. This can be rough, but the temporary trial can help you get your down payment. Additionally, you can put together an exhaustive inventory of items you can sell. Broken gold jewelry can bring a good amount from local jewelers. A closetful of small things might add up to a fair amount at a garage or tag sale. Also, you can look into selling any investments you hold.

Borrow money from your retirement plan. Investigate the provisions of your retirement program. It is possible to borrow funds from a 401(k) for you down payment or get a withdrawal from an Individual Retirement Account. Be sure to ask your plan representative about the tax ramifications, your obligation for repaying funds, and possible early withdrawal penalties.

Ask for a gift from your family. Many buyers somtimes get down payment assistance from giving parents and other family members who may be willing to help get them in their first home. Your family members may be eager to help you reach the milestone of owning your own home.

Contact housing finance agencies. Special mortgate loan programs are extended to homebuyers in specific circumstances, such as low income purchasers or buyers planning to improve houses in a specific place, among others. Working with this kind of agency, you may get a below market interest rate, down payment help and other perks. These kinds of agencies may help eligible buyers with a lower interest rate, get you your down payment, and offer other assistance. These non-profit agencies to build up the value of homes in certain neighborhoods.

Research no-down and low-down mortgages.

  • Federal Housing Administration (FHA) mortgage loans

    The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low to moderate-income families get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in qualifying for mortgages. FHA assists first-time homebuyers and others who may not be able to qualify for a typical mortgage loan by themselves, by offering mortgage insurance to the private lenders. Interest rates with an FHA loan are usually the market interest rate, while the down payment amounts for an FHA mortgage are smaller than those of conventional loans. The down payment can go as low as three percent while the closing costs might be financed in the mortgage.

  • VA loans

    With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan requires no down payment, has mimimal closing costs, and offers a competitive interest rate. Even though the loans are not actually financed by the VA, the office certifies borrowers by issuing eligibility certificates.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that closes along with the first. Generally the piggyback loan is for 10 percent of the purchase price, while the first mortgage finances 80 percent. The borrower pays the remaining 10%, instead of come up with the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" mortgage, the seller commits to loan you a portion of his own equity to help you get your down payment funds. You would finance the majority of the purchase price with a traditional lending institution and borrow the remaining amount from the seller. Usually you'll pay a slightly higher rate with the loan from the seller.

No matter your method of pulling together your down payment, the thrill of owning your own home will be just as sweet!

Want to discuss down payments? Give us a call: 405-513-7700.

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