Your Down Payment
Many people who are looking to purchase a new house qualify for a loan, but they don't have a large sum of cash to pay the standard down payment. Here are a few ideas:
Cut expenses and save. Turn your budget upside-down to find extra money to go toward your down payment. You could also decide to enroll in an automatic savings plan to have a percentage of your payroll automatically deposited into savings. You could look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or skip a vacation.
Work a second job and sell items you don't need. Maybe you can get an additional job to get your down payment money. You can also get creative about the things you can sell. Maybe you own collectibles you can sell on an online auction, or quality household items for a garage or tag sale. You could also explore what your investments may bring if sold.
Tap into your retirement funds. Investigate the parameters of your retirement program. Some people get down payment money by withdrawing from their IRAs or taking money out of their 401(k) programs. Make sure you understand about any penalties, the way this may affect on your income taxes, and repayment obligation.
Ask for help from family members. Many homebuyers are sometimes lucky enough to receive help with their down payment help from thoughtful parents and other family members who may be anxious to help get them in their own home. Your family members may be pleased to help you reach the milestone of buying your own home.
Contact housing finance agencies. Provisional loan programs are provided to buyers in certain circumstances, like low income homebuyers or buyers looking to renovating homes in a targeted neighborhood, among others. Working with this kind of agency, you can be given an interest rate that is below market, down payment help and other benefits. Housing finance agencies may assist you with a reduced interest rate, help with your down payment, and provide other advantages. These non-profit programs were established to boost community in particular areas.
Explore no-down and low-down mortgage loans.
- FHA mortgages
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in assisting low to moderate-income individuals qualify for 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 the private lenders, enabling new homebuyers who will not qualify for a typical mortgage loan, to receive a mortgage.
Interest rates for an FHA mortgage are generally the market interest rate, while the down payment amounts with an FHA mortgage will be below those of conventional loans. The down payment can be as low as three percent while the closing costs might be financed in the mortgage loan.
- VA mortgages
VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can get a VA loan, which typically offers a low rate of interest, no down payment, and limited closing costs. While it's true that the mortgage loans don't originate from the VA, the office certifies applicants by issuing eligibility certificates.
- Piggy-back loans
You can finance a down payment with a second mortgage that closes along with the first. Usually the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage finances 80 percent. The borrower covers the remaining 10%, rather than come up with the usual 20% down payment.
- Carry-Back loans
In a "carry back" mortgage, the seller agrees to loan you part of his own equity to help you get your down payment funds. You would finance the largest portion of the purchase price with a traditional lending institution and finance the remaining amount with the seller. Usually you'll pay a slightly higher interest rate on the loan from the seller.
The satisfaction will be the same, no matter how you manage to come up with the down payment. Your new home will be your reward!
Want to discuss down payments? Call us at 703.255-5810.