Your Down Payment
Many people who would like to buy a new house qualify for a loan, but they can't afford a large down payment. Below are a few straightforward ways to get together a down payment
Slash your budget and build up savings. Scrutinize the budget to uncover ways you can cut expenses to go toward your down payment. Also, you can look into bank programs through which a specific portion of your paycheck is automatically transferred into savings each pay period. Some effective strategies to build up funds include moving into less expensive housing, and skipping your vacation for a year or two.
Sell things you don't really need and get a part-time job. Try to get a second job. This can be rough, but the temporary trial can provide your down payment money. In addition, you can make an exhaustive inventory of items you can sell. Unused gold jewelry can be sold at local jewelry stores. You may have collectibles you can put up for sale at an online auction, or quality household goods for a garage or tag sale. You can also explore what any investments you hold may sell for.
Tap into retirement funds. Research the specifics of your particular plan. You can take out funds from a 401(k) plan for a down payment or withdraw from an Individual Retirement Account. Make sure you understand the tax consequences, your obligation for repaying the money, and penalties for withdrawing early.
Request a generous gift from your family. First-time buyers are often lucky enough to receive down payment help from giving 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 goal of having your own home.
Learn about housing finance agencies. Special mortgage loans are offered to buyers in certain situations, like low income homebuyers or homebuyers planning to remodel houses in a certain area, among others. With the help of a housing finance agency, you probably will get a below market interest rate, down payment assistance and other perks. Housing finance agencies can assist you with a lower interest rate, get you your down payment, and provide other assistance. These non-profit programs exist to promote home ownership in certain neighborhoods.
Find out about low-down and no-down mortgage loan programs.
- FHA mortgage loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income individuals get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in qualifying for mortgages.
FHA offers mortgage insurance to private lenders, ensuring the buyers are eligible for a mortgage loan.
Down payment amounts for FHA mortgages are below those for conventional mortgage loans, although these mortgages come with average rates of interest. The down payment can go as low as three percent and the closing costs might be financed in the mortgage.
- VA mortgage loans
With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan requires no down payment, has limited closing costs, and provides a competitive interest rate. While the VA doesn't actually provide the mortgages, it does issue a certificate of eligibility to apply for a VA loan.
- Piggy-back loans
You may fund a down payment with a second mortgage that closes at the same time as the first. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, rather than come up with the usual 20% down payment.
- Carry-Back loans
In the option of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. You would borrow the majority of the purchase price from a traditional lender and borrow the remaining amount from the seller. Often, this type of second mortgage will have higher interest.
No matter your method of putting together down payment money, the thrill of reaching the goal of owning your own home will be just as sweet!
Need to talk about your down payment? Call us at 561-475-2281.