Your Down Payment

Lots of folks who are looking to buy a new house qualify for a loan, but they don't have a lot of money to put up a down payment. Want to look into getting a new house, but don't know how to put together a down payment?

Reduce expenses and save. Scrutinize your budget to find ways you can cut expenses to save for your down payment. You could also try enrolling 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 budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay local for your family vacation.

Work more and sell things you do not need. Maybe you can get an additional job and save your earnings. You can also seriously consider the possessions you actually need and the things you can sell. Multiple small items may add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you hold.

Tap into your retirement funds. Investigate the parameters of your particular plan. Some people get down payment money from withdrawing funds from their IRAs or borrowing from their 401(k) plans. Be sure you know about any penalties, the effect this will have on your income taxes, and repayment obligation.

Ask for assistance from members of your family. First-time buyers somtimes get help with their down payment assistance from giving parents and other family members who are anxious to help get them in their own home. Your family members may be willing to help you reach the goal of buying your own home.

Research housing finance agencies. These agencies offer special mortgage programs to moderate and low income buyers, buyers with an interest in sprucing up a house within a particular area, and additional groups as specified by the finance agency. With the help of a housing finance agency, you can be given a below market interest rate, down payment help and other perks. Housing finance agencies can help you with a reduced interest rate, get you your down payment, and offer other assistance. The principal goal of non-profit housing finance agencies is boosting residential ownership in targeted areas.

Research no-down and low-down mortgages.

  • FHA mortgage loans

    The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in assisting low and moderate-income buyers get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get FHA offers mortgage insurance to the private lenders, enabling homebuyers who may not be eligible for a traditional mortgage loan, to obtain a mortgage. Interest rates with an FHA mortgage usually feature the going interest rate, but the down payment with an FHA mortgage will be lower than those of conventional loans. The required down payment can go as low as 3 percent and the closing costs could be included in the mortgage loan.

  • VA loans

    Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This special loan requires no down payment, has mimimal closing costs, and provides the benefit of a competitive interest rate. Although the VA does not issue the mortgage loans, it does certify eligibility to apply for a VA loan.

  • Piggy-back loans

    A piggy-back loan is a second mortgage that you close at the same time as the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, rather than come up with the typical 20% down payment.

  • Carry-Back loans

    In a "carry back" agreement, the seller commits to lend 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 mortgage lending institution and borrow the remainder from the seller. Generally, this kind of second mortgage has a higher rate of interest.

No matter how you gather down payment money, the satisfaction of reaching the goal of living in your own home will be just as sweet!

Want to discuss down payments? Give us a call at 248-644-1200.

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