Putting Together Your Down Payment
Lots of buyers can easily qualify for various loan programs, but they can't afford a large down payment. Here are a few methods that will help you get together your down payment
Reduce expenses and save. Scrutinize your budget to uncover extra money to save for your down payment. You could also decide to enroll in an automatic savings plan to automatically have a predetermined amount from your paycheck transferred into your savings account. Some practical approaches to save additional funds include moving into a residence that is less expensive, and skipping your vacation for a year or two.
Work a second job and sell items you do not need. Perhaps you can get an additional job and save your earnings. You can also get creative about the items you can sell. Maybe you own collectibles you can sell at an online auction, or quality household items for a tag or garage sale. Also, you might want to think about selling any investments you own.
Borrow money from a retirement plan. Investigate the parameters of your specific plan. Many people get down payment money by withdrawing what they need from their Individual Retirement Accounts or pulling funds out of their 401(k) plans. Make sure you understand about any penalties, the effect this will have on income taxes, and repayment obligation.
Request a generous gift from family. Many homebuyers are often lucky enough to get help with their down payment help from gracious family members who are anxious to help get them in their own home. Your family members may be pleased at the chance to help you reach the goal of buying your first home.
Research housing finance agencies. These types of agencies extend special mortgage loans to moderate and low income borrowers, buyers interested in sprucing up a home in a particular part of the city, and other groups as defined by each agency. With the help of this kind of agency, you can be given a below market interest rate, down payment help and other incentives. Housing finance agencies may assist you with a lower interest rate, help with your down payment, and provide other advantages. These non-profit agencies exist to promote home ownership in particular neighborhoods.
Find out about low-down and no-down mortgages.
- 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 helping low and moderate-income families qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages.
FHA assists first-time buyers and others who may not be eligible for a traditional loan on their own, by providing mortgage insurance to the private lenders.
Down payment requirements for FHA loans are smaller than those for traditional mortgage loans, even though these loans hold average interest rates. The required down payment can go as low as 3 percent while the closing costs could be financed in the mortgage loan.
- VA mortgages
Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This particular loan does not require a down payment, has reduced closing costs, and provides a competitive rate of interest. Although the VA does not issue the mortgages, it does certify eligibility to qualify for a VA loan.
- Piggy-back loans
You can finance your down payment using a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan is for 10 percent of the home's amount, while the first mortgage covers 80 percent. The borrower pays the remaining 10%, rather than come up with the typical 20% down payment.
- Carry-Back loans
We a seller carries back a second mortgage, the you borrow a portion of the seller's home equity.. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Generally, this type of second mortgage has higher interest.
No matter your strategy of putting together your down payment, the thrill of reaching the goal of owning your own home will be just as sweet!
Need to talk about down payments? Give us a call at 7133252099.