Putting Together Your Down Payment
Lots of buyers qualify for several different kinds of mortgages, but they don't have a lot of cash to pay a down payment. Below are a few straightforward ways to put together your down payment
Tighten your belt and save. Turn your budget inside out to uncover ways you can cut expenses to go toward your down payment. There are bank programs in which a specific portion of your paycheck is automatically placed into savings every pay period. You could look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you may move into less expensive housing, or stay close to home for your family vacation.
Sell items you do not really need and get a second job. Look for an additional job. This can be exhausting, but the temporary trial can help you get your down payment. You can also get creative about the items you can sell. You may have desirable items you can put up for sale at an auction website, or quality household items for a garage or tag sale. Also, you might want to consider selling any investments you hold.
Borrow funds from a retirement plan. Explore the specifics of your particular plan. It is possible to borrow money from a 401(k) plan for you down payment or perform a withdrawal from an IRA. Make sure you understand the tax consequences, repayment terms, and penalties for withdrawing early.
Ask for help from generous family members. Many homebuyers somtimes get down payment assistance from caring family members who may be willing to help get them in their first home. Your family members may be pleased at the chance to help you reach the goal of owning your own home.
Learn about housing finance agencies. Provisional mortgage loans are given to buyers in specific circumstances, such as low income purchasers or buyers looking to renovating homes in a particular place, among others. Working with a housing finance agency, you may be given a below market interest rate, down payment assistance and other advantages. These types of agencies may help you with a reduced rate of interest, get you your down payment, and offer other assistance. These non-profit agencies to boost home ownership in certain places.
Find out about low-down and no-down mortgage loan programs.
- 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 an important part in helping low to moderate-income individuals get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting home financing.
FHA helps first-time buyers and others who would not be able to qualify for a traditional mortgage by themselves, by providing mortgage insurance to private lenders.
Interest rates with an FHA mortgage are usually the going interest rate, while the down payment for an FHA loan are less than those of conventional loans. Closing costs might be financed in the mortgage, and your down payment may be as low as 3 percent of the total.
- VA loans
With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan does not require a down payment, has reduced closing costs, and provides a competitive rate of interest. Although the VA doesn't provide the loans, it does issue a certificate of eligibility to qualify for a VA loan.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes along with the first. Most of the time, the piggyback loan is for 10 percent of the purchase price, and the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, rather than needing to put together the typical 20% down payment.
- Carry-Back loans
In a "carry back" agreement, the seller commits to loan you a portion of his own equity to help you get your down payment money. The buyer funds the highest percentage of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a slightly higher rate on the loan financed by the seller.
The feeling of accomplishment 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? Give us a call at 7032555810.