Putting Together Your Down Payment
Many buyers qualify for various loan programs, but they don't have a lot of money to put up a down payment. We have a few suggestions
Tighten your belt and save. Be on the look-out for ways to reduce your expenses to save toward 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. Some practical strategies to build up funds include moving into less expensive housing, and skipping your vacation for a year or two.
Sell things you do not really need and find a second job. Try to find a second job. This can be rough, but the temporary trial can help you get your down payment. In addition, you can make a comprehensive list of items you can sell. Unworn gold jewelry can be sold at local jewelers. You may own desirable items you can put up for sale at an auction website, or quality household items for a tag or garage sale. You can also explore what any investments you have may bring if sold.
Borrow your down payment from your retirement plan. Research the details for your particular plan. It is possible to pull out funds from a 401(k) for a down payment or get a withdrawal from an Individual Retirement Account. Be sure you know about any penalties, the effect this may have on your taxes, and repayment terms.
Ask for help from family members. Many homebuyers somtimes get help with their down payment assistance from thoughtful family members who are eager to help get them in their first home. Your family members may be happy at the chance to help you reach the milestone of owning your own home.
Research housing finance agencies. Special mortgate loan programs are provided to buyers in specific circumstances, such as low income purchasers or future homeowners planning to remodel houses in a specific area, among others. With the help of a housing finance agency, you probably will be given a below market interest rate, down payment help and other advantages. These kinds of agencies can assist eligible homebuyers with a reduced interest rate, get you your down payment, and provide other benefits. These non-profit agencies were established to build up community in specific places.
Explore no-down and low-down mortgage loan programs.
- FHA mortgage loans
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low and moderate-income buyers qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgages.
FHA assists first-time homebuyers and others who might not be able to qualify for a typical loan on their own, by offering mortgage insurance to the private lenders.
Interest rates with an FHA loan normally feature the market interest rate, but the down payment for an FHA loan will be below those of conventional loans. The required down payment may go as low as three percent and the closing costs may be covered by the mortgage loan.
- VA mortgages
VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can get a VA loan, which typically offers a competitive rate of interest, no down payment, and reduced closing costs. Although the VA does not actually finance the loans, it does issue a certificate of eligibility to apply for a VA mortgage.
- Piggy-back loans
You may fund a down payment using a second mortgage that closes along with the first. Usually the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, rather than having to pull together the typical 20% down payment.
- Carry-Back loans
In the case of a seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. In this scenario, you would borrow the largest portion of the purchase price from a traditional lending institution and finance the remainder with the seller. Usually you'll pay a somewhat higher interest rate on the loan financed by the seller.
No matter your method of pulling together your down payment money, the satisfaction of reaching the goal of owning your own home will be just as great!
Need to talk about down payments? Call us at 561-475-2282.