Your Down Payment
Lots of borrowers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to look into getting a new home, but don't know how to get together a down payment?
Slash the budget and build up savings. Be on the look-out for ways you can trim your expenses to set aside money for a down payment. Also, you can look into bank programs in which some of your take-home pay is automatically placed into savings each pay period. You would be wise to look into some big expenses in your spending history that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay local for your vacation.
Work a second job and sell items you do not need. Look for a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. Additionally, you can put together a comprehensive list of items you may be able to sell. Unused gold jewelry can bring a good price from local jewelers. A closetful of small items may add up to a nice sum at a garage or tag sale. Also, you can consider selling any investments you own.
Borrow from retirement funds. Research the details for your particular plan. Many people get down payment money by withdrawing from Individual Retirement Accounts or borrowing from their 401(k) plans. Be sure you understand the tax ramifications, repayment terms, and early withdrawal penalties.
Ask for help from members of your family. First-time homebuyers are sometimes fortunate enough to receive help with their down payment assistance from caring parents and other family members who are anxious to help get them in their own home. Your family members may be eager to help you reach the milestone of buying your first home.
Learn about housing finance agencies. These types of agencies offer provisional mortgage programs for moderate and low income buyers, buyers interested in sprucing up a house in a targeted area, and other groups as specified by each finance agency. Financing with this kind of agency, you probably will get a below market interest rate, down payment help and other perks. These kinds of agencies may help you with a lower rate of interest, get you your down payment, and offer other assistance. These non-profit agencies were formed to boost home ownership in specific areas.
Research no-down and low-down mortgages.
- Federal Housing Administration (FHA) loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in aiding low to moderate-income buyers get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to qualify for home financing.
FHA offers mortgage insurance to private lenders, ensuring the buyers are eligible for financing.
Down payment totals for FHA mortgages are below those with conventional mortgage loans, although these mortgages come with average rates of interest. Closing costs may be covered by the mortgage, and the down payment could be as low as 3 percent of the total.
- VA mortgages
With a guarantee from 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 a competitive interest rate. Even though the VA doesn't actually issue the loans, it does certify eligibility to qualify 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. Usually the piggyback loan is for 10 percent of the purchase amount, and the first mortgage covers 80 percent. The borrower pays the remaining 10%, rather than having to pull together the typical 20% down payment.
- Carry-Back loans
In the option of a seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Generally, this form of second mortgage has a higher rate of interest.
No matter your strategy of getting together down payment funds, the thrill of reaching the goal of owning your own home will be just as sweet!
Want to discuss the best options for down payments? Give us a call: 703.255-5810.