Putting Together Your Down Payment
Many people who are looking to purchase a new house can easily qualify for various loan programs, but they can't afford a large down payment. Below are a few straightforward ways to put together a down payment
Reduce expenses and save. Scrutinize your budget to discover ways you can cut expenses to save for your down payment. There are bank programs through which some of your paycheck is automatically transferred into a savings account each pay period. Some practical approaches to build up funds include moving into less expensive housing, and staying home for your family vacation for a year or two.
Sell items you don't need and get a part-time job. Try to find a second job. This can be rough, but the temporary trial can help you get your down payment. You can also seriously consider the possessions you really need and the items you can put up for sale. Multiple small things could add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you own.
Borrow from your retirement funds. Investigate the parameters of your particular plan. You can pull out money from a 401(k) plan for you down payment or perform a withdrawal from an IRA. Be sure you are clear about any penalties, the way this could affect on your income taxes, and repayment obligation.
Ask for assistance from family members. First-time buyers are sometimes lucky enough to get down payment help from giving family members who are willing to help them get into their own home. Your family members may be eager to help you reach the milestone of owning your first home.
Contact housing finance agencies. These types of agencies extend provisional loan programs to moderate and low income buyers, buyers interested in remodeling a residence in a specific part of the city, and other groups as defined by each agency. Financing with this type of agency, you can receive an interest rate that is below market, down payment assistance and other benefits. Housing finance agencies may assist eligible homebuyers with a lower interest rate, help with your down payment, and provide other assistance. These non-profit agencies to promote home ownership in certain areas.
Explore no-down and low-down mortgages.
- Federal Housing Administration (FHA) mortgage loans
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in aiding low and moderate-income families qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to qualify for mortgage loans.
FHA offers mortgage insurance to the private lenders, helping the buyers to become eligible for a home loan.
Interest rates with an FHA mortgage are usually the current interest rate, while the down payment for an FHA loan are below those of conventional loans. Closing costs may be financed in the mortgage, while the down payment could be as low as 3 percent of the purchase price.
- VA mortgage loans
VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which generally offers a reasonable rate of interest, no down payment, and minimal closing costs. While the VA doesn't issue the mortgage loans, it does certify eligibility to qualify for a VA mortgage.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes with the first. Generally the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than having to put together the typical 20% down payment.
- Carry-Back loans
With a carry-back mortgage, the seller loans you part of his or her equity. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a somewhat higher interest rate with the loan financed by the seller.
The feeling of accomplishment will be the same, no matter how you manage to pull together the down payment. Your brand new home will be worth it!
Need to talk about the best options for down payments? Call us at 703.255-5810.