Your Down Payment

Lots of borrowers can easily qualify for various loan programs, but they don't have a lot of money to put up the standard down payment. Below are a few straightforward methods that will help you put together a down payment

Slash the budget and build up savings. Turn your budget inside out to discover ways you can cut expenses to save for your down payment. You could also try enrolling in an automatic savings plan at your bank to have a portion of your pay automatically moved into a savings account. You would be wise to look into some big expenses in your spending history that you can do without, or trim, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay close to home for your family vacation.

Work more and sell things you don't need. Perhaps you can find a second job and save your earnings. You can also get creative about the things you can put up for sale. A closetful of small things might 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 money from a retirement plan. Explore the specifics for your individual plan. You can borrow money from a 401(k) plan for you down payment or make a withdrawal from an IRA. Make sure you understand the tax ramifications, repayment terms, and any penalties for withdrawing early.

Ask for a generous gift from your family. Many homebuyers somtimes receive down payment assistance from caring family members who may be prepared to help get them in their own home. Your family members may be pleased to help you reach the milestone of owning your first home.

Research housing finance agencies. These types of agencies offer special loan programs for moderate and low income homebuyers, buyers interested in renovating a residence in a specific part of the city, and other certain kinds of buyers as specified by each agency. With the help of a housing finance agency, you probably will receive a below market interest rate, down payment assistance and other benefits. These kinds of agencies may assist you with a reduced rate of interest, help with your down payment, and provide other benefits. The primary purpose of non-profit housing finance agencies is promoting residential ownership in specific areas.

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

• FHA loans

  The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income individuals get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA provides mortgage insurance to private lenders, enabling buyers who might not be eligible for a traditional mortgage loan, to receive financing. Interest rates with an FHA mortgage normally feature the current interest rate, but the down payment with an FHA loan will be below those of conventional loans. Closing costs may be financed in the mortgage, while your down payment could be as low as 3 percent of the total.

• VA loans

  With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This particular loan requires no down payment, has limited closing costs, and provides the benefit of a competitive interest rate. While the mortgage loans aren't actually issued by the VA, the office certifies applicants by issuing eligibility certificates.

• Piggy-back loans

  You can fund your down payment using a second mortgage that closes with the first. In most cases the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than needing to put together the usual 20% down payment.

• Carry-Back loans

  With a carry-back mortgage, the seller loans you part of his or her home equity. In this scenario, you would borrow the majority of the purchase price from a traditional lending institution and borrow the remaining amount from the seller. Usually you'll pay a somewhat higher rate with the loan financed by the seller.

The satisfaction will be the same, no matter which strategy you use to come up with the down payment. Your new home will be worth it!

Want to discuss your down payment? Call us: 214-869-7339.