Your Down Payment

Many borrowers qualify for a mortgage loan, but they don't have much to put up a down payment. Below are a few straightforward ways to get together a down payment.

Cut expenses and save. Be on the look-out for ways you can reduce your monthly expenses to put away money for a down payment. There are bank programs through which some of your take-home pay is automatically deposited into savings each pay period. Some practical strategies to put together funds include moving into housing that is less expensive and skipping your family vacation for a year or two.

Sell items you do not really need and get a second job. Maybe you can find a second job to get your down payment money. In addition, you can put together a comprehensive list of things you may be able to sell. Unused gold jewelry can be sold at local jewelry stores. You might have collectibles you can put up for sale at an online auction, or household goods for a tag or garage sale. You might also research what your investments could sell for.

Borrow from retirement funds. Check the provisions of your particular plan. Many people get down payment money from withdrawing funds from IRAs or pulling funds out of 401(k) plans. You will need to make sure you understand about any penalties, the effect this will have on taxes, and repayment obligation.

Request a gift from your family. First-time homebuyers sometimes get down payment help from caring parents and other family members who may be willing to help get them in their first home. Your family members may be inclined to help you reach the goal of buying your first home.

Research housing finance agencies. These agencies provide provisional mortgage programs for moderate- and low-income borrowers, buyers with an interest in renovating a residence within a particular part of the city, and other groups as specified by each finance agency. With the help of this kind of agency, you can receive a below market interest rate, down payment helps and other perks. These kinds of agencies can help you with a reduced rate of interest, get you your down payment, and provide other assistance. These non-profit programs were formed to promote home ownership in certain areas.

Explore 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 an important role in assisting low and moderate-income Americans qualify for mortgages. Part of the United States Department of Housing and Urban Development (HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages. FHA aids first-time homebuyers and others who would not be eligible for a typical loan on their own, by providing mortgage insurance to the lenders. Down payment amounts for FHA mortgages are smaller than those with typical mortgage loans, although these loans hold current rates of interest. The required down payment may go as low as three percent and the closing costs may be covered by the mortgage.

• VA mortgages

  VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can qualify for a VA loan, which usually offers a competitive interest rate, no down payment, and minimal closing costs. While the loans are not actually financed by the VA, the department certifies borrowers by providing eligibility certificates.

• Piggy-back loans

  You may finance your down payment through a second mortgage that closes with the first. Usually, the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. Instead of the traditional 20 percent down payment, the buyer just has to cover the remaining 10 percent.

• Carry-Back loans.

  With a carry-back mortgage, the seller loans you part of his or her equity. In this scenario, you would finance the majority of the purchase price with a traditional lender and finance the remainder with the seller. Typically, this type of second mortgage will have higher interest.

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

Need to talk about down payment options? Call HERN CAPITAL LLC at (626)918-4592.