Your Down Payment
Many people who would like to buy a new house qualify for a loan, but they don't have a lot of cash to put up a down payment. Here are a few ideas:
Cut expenses and save. Be on the look-out for ways to reduce your expenses to put away money for a down payment. There are bank programs through which a specific portion of your paycheck is automatically transferred into a savings account every pay period. Some practical ways to put together funds include moving into less expensive housing, and staying local for your vacation for a year or two.
Sell things you don't need and find a part-time job. Maybe you can get an additional job and build up your earnings. In addition, you can put together an exhaustive list of items you may be able to sell. Unused gold jewelry can bring a good price from local jewelry stores. Maybe you own desirable items you can put up for sale at an auction website, or household goods for a garage or tag sale. You might also explore what any investments you own will bring if sold.
Borrow funds from your retirement plan. Investigate the provisions of your particular plan. Many homebuyers get down payment money by withdrawing from Individual Retirement Accounts or taking money out of their 401(k) programs. Make sure you understand the tax consequences, your obligation for repayment, and any penalties for withdrawing early.
Ask for help from generous family members. Many buyers are often fortunate enough to get down payment assistance from thoughtful parents and other family members who are eager to help them get into their first home. Your family members may be inclined to help you reach the milestone of owning your own home.
Learn about housing finance agencies. Special mortgage programs are offered to buyers in specific situations, such as low income homebuyers or future homeowners looking to renovating houses in a specific part of town, among others. Financing through a housing finance agency, you can receive an interest rate that is below market, down payment help and other benefits. Housing finance agencies can assist eligible homebuyers with a lower interest rate, help with your down payment, and provide other advantages. The primary mission of non-profit housing finance agencies is boosting residential ownership in certain areas.
Explore no-down and low-down mortgage loan programs.
- FHA mortgages
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low and moderate-income families get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages.
FHA helps first-time buyers and others who would not be able to qualify for a traditional mortgage loan by themselves, by offering mortgage insurance to the private lenders.
Interest rates with an FHA loan typically feature the going interest rate, but the down payment requirements for an FHA mortgage will be lower than those of conventional loans. The required down payment can go as low as 3 percent and the closing costs might be included in the mortgage loan.
- VA mortgage loans
With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This particular loan does not require a down payment, has mimimal closing costs, and provides a competitive rate of interest. While the loans don't originate from the VA, the department certifies applicants by providing eligibility certificates.
- Piggy-back loans
You can fund your down payment through a second mortgage that closes at the same time as the first. Usually the piggyback loan takes care of 10 percent of the home's amount, and the first mortgage finances 80 percent. The borrower covers the remaining 10%, rather than putting the usual 20% down payment.
- Carry-Back loans
With a carry-back mortgage, the you borrow part of the seller's home equity.. You would finance the largest portion of the purchase price with a traditional mortgage lending institution and finance the remaining amount with the seller. Generally, this type of second mortgage has a higher rate of interest.
The feeling of accomplishment will be the same, no matter which approach you use to come up with your down payment. Your new home will be your reward!
Need to talk about down payment options? Give us a call: 7032555810.