Your Down Payment
Lots of folks who are looking to purchase a new house can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Here's where you start
Tighten your belt and save. Scrutinize the budget to discover ways you can cut expenses to save for your down payment. Also, you can look into bank programs in which some of your take-home pay is automatically deposited into a savings account every pay period. Some practical strategies to build up funds include moving into less expensive housing, and skipping your vacation for a year or two.
Work a second job and sell items you don't need. Try to get a second job. This can be exhausting, but the temporary trial can provide your down payment money. Additionally, you can make a comprehensive inventory of items you may be able to sell. Unused gold jewelry can bring a good amount from local jewelry stores. Maybe you own desirable items you can put up for sale at an auction website, or quality household goods for a tag or garage sale. Also, you can look into selling any investments you own.
Borrow funds from your retirement plan. Research the specifics of your particular plan. You can take out money from a 401(k) plan for a down payment or withdraw from an IRA. Make sure you comprehend the tax consequences, repayment terms, and possible early withdrawal penalties.
Ask for assistance from family members. First-time homebuyers are sometimes fortunate enough to receive down payment help from giving family members who may be willing to help get them in their first home. Your family members may be happy at the chance to help you reach the goal of buying your own home.
Learn about housing finance agencies. These agencies offer special mortgage programs for moderate and low income borrowers, buyers interested in rehabilitating a home within a specific part of the city, and other specific types of buyers as specified by each finance agency. Financing with this type of agency, you probably will be given an interest rate that is below market, down payment assistance and other incentives. Housing finance agencies can help eligible buyers with a reduced interest rate, get you your down payment, and provide other assistance. The main goal of not-for-profit housing finance agencies is build up the purchase of homes in specific areas.
Find out about low-down and no-down mortgage loan programs.
- Federal Housing Administration (FHA) mortgages
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting 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 who need to get mortgages.
FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a mortgage.
Down payment requirements for FHA loans are below those of traditional mortgage loans, even though these loans hold average interest rates. The required down payment can be as low as 3 percent while the closing costs might 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 usually offers a low interest rate, no down payment, and limited closing costs. While the VA doesn't issue the loans, it does certify eligibility to apply for a VA loan.
- Piggy-back loans
You can finance a down payment with a second mortgage that closes along with the first. Usually the piggyback loan is for 10 percent of the purchase price, while the first mortgage covers 80 percent. Instead of the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
With a carry-back mortgage, the seller loans you part of his or her home equity. The buyer funds the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Often, this form of second mortgage will have higher interest.
The satisfaction will be the same, no matter which strategy you use to come up with your down payment. Your new home will be your reward!
Want to discuss down payment options? Call us at 954.920.9799.