Building Your Down Payment
Many people who are looking to purchase a new home can qualify for various loan programs, but they don't have a lot of money to pay the standard down payment. Here's where you start
Slash your budget and build up savings. Scrutinize your budget to discover extra money to save for your down payment. You also might enroll in an automatic savings plan to automatically have a specific portion of your take-home pay deposited into savings. Some effective approaches to put together funds include moving into housing that is less expensive, and skipping a year's vacation.
Sell things you do not really need and get a second job. Try to get an additional job. This can be exhausting, but the temporary trial can provide your down payment money. You can also get creative about the items you may be able to sell. A closetful of small things can add up to a fair amount at a garage or tag sale. Also, you might want to think about selling any investments you hold.
Borrow from your retirement plan. Investigate the provisions of your particular plan. You can take out money from a 401(k) for you down payment or make a withdrawal from an Individual Retirement Account. Be sure you know about any penalties, the way this could affect on your taxes, and repayment obligation.
Request a generous gift from family. Many homebuyers are often fortunate enough to get help with their down payment assistance from giving parents and other family members who may be able to help them get into their first home. Your family members may be inclined to help you reach the milestone of buying your first home.
Contact housing finance agencies. These agencies extend special mortgage programs to low and moderate-income borrowers, buyers interested in rehabilitating a home within a particular area, and other groups as specified by each agency. Working through this type of agency, you probably will be given a below market interest rate, down payment help and other benefits. Housing finance agencies can help you with a lower rate of interest, get you your down payment, and provide other benefits. These non-profit agencies to build up home ownership in particular neighborhoods.
Learn about low-down and no-down mortgages.
- Federal Housing Administration (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 role in aiding low to moderate-income families qualify for mortgage loans. Part of the U.S. 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 typical mortgage loan by themselves, by providing mortgage insurance to the private lenders.
Down payment totals for FHA mortgages are smaller than those with traditional mortgage loans, although these mortgages come with current rates of interest. Closing costs might be included in the mortgage, and the down payment might be as low as 3 percent of the purchase price.
- VA mortgages
With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This particular loan requires no down payment, has reduced closing costs, and provides the benefit of a competitive rate of interest. Although the loans don't originate from the VA, the department certifies borrowers by providing eligibility certificates.
- Piggy-back loans
You may finance a down payment with a second mortgage that closes along with the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, instead of having to pull together the usual 20% down payment.
- Carry-Back loans
With a carry-back mortgage, the you borrow a portion of the seller's home equity.. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lending institution and borrow the remaining amount from the seller. Often, this form of second mortgage will have higher interest.
The feeling of accomplishment will be the same, no matter which method you use to come up with the down payment. Your brand new home will be your reward!
Want to discuss down payments? Give us a call at 954.920.9799.