Your Down Payment
Many buyers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Here are a few ways to get together your down payment
Tighten your belt and save. Look for ways to trim your monthly expenses to save toward a down payment. You might also decide to enroll in an automatic savings plan to automatically have a set portion of your take-home pay moved into savings. You could look into some big expenses in your budget that you can live without, or trim, at least temporarily. For example, you may move into less expensive housing, or skip a vacation.
Sell items you do not need and get a second job. Perhaps you can find a second job to get your down payment money. In addition, you can make a comprehensive list of items you may be able to sell. Broken gold jewelry can bring a good amount from local jewelers. Multiple small things could add up to a fair amount at a garage or tag sale. Also, you can look into selling any investments you own.
Borrow from your retirement funds. Explore the details for your individual plan. It is possible to borrow 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 any penalties for withdrawing early.
Ask for assistance from family members. First-time homebuyers are often lucky enough to receive help with their down payment assistance from gracious parents and other family members who are able to help get them in their first home. Your family members may be willing to help you reach the goal of owning your own home.
Learn about housing finance agencies. These types of agencies offer provisional loan programs for moderate and low income buyers, buyers interested in sprucing up a house within a particular part of the city, and other groups as specified by each finance agency. With the help of a housing finance agency, you may be given an interest rate that is below market, down payment help and other advantages. Housing finance agencies can help you with a lower rate of interest, get you your down payment, and provide other assistance. These non-profit agencies exist to boost home ownership in specific neighborhoods.
Research no-down and low-down mortgage loans.
- Federal Housing Administration (FHA) mortgages
The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income buyers get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA aids first-time buyers and others who might not be eligible for a traditional mortgage loan on their own, by offering mortgage insurance to the private lenders.
Interest rates for an FHA mortgage are generally the going interest rate, while the down payment for an FHA loan are below those of conventional loans. The required down payment can be as low as three percent while the closing costs could be covered by the mortgage loan.
- VA mortgage loans
VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people qualify for a VA loan, which generally offers a reasonable rate of interest, no down payment, and minimal closing costs. While the VA doesn't finance the loans, it does certify eligibility to qualify for a VA mortgage.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close with the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage finances 80 percent. Rather than the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
In a "carry back" agreement, the seller agrees to lend you some of his own equity to help you with your down payment funds. You would finance the majority of the purchase price with a traditional lending institution and finance the remainder with the seller. Generally, this form of second mortgage has a higher rate of interest.
The feeling of accomplishment will be the same, no matter how you manage to pull together your down payment. Your new home will be worth it!
Need to talk about the best options for down payments? Give us a call: 877-310-6200.