Your Down Payment
Many borrowers can qualify for various loan programs, but they don't have a lot of money to pay a down payment. Want to look into getting a new home, but don't know how to put together your down payment?
Reduce expenses and save. Scrutinize the budget to find ways you can cut expenses to go toward your down payment. There are bank programs through which some of your take-home pay is automatically deposited into a savings account every pay period. You could look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you may move into less expensive housing, or stay local for your vacation.
Work more and sell items you don't need. Perhaps you can get a second job to get your down payment money. In addition, you can put together an exhaustive inventory of items you can sell. Unused gold jewelry can be sold at local jewelry stores. You might own desirable items you can put up for sale on an auction website, or household goods for a garage or tag sale. Also, you can think about selling any investments you hold.
Borrow from retirement funds. Research the details of your particular plan. It is possible to pull out funds from a 401(k) plan for a down payment or get a withdrawal from an Individual Retirement Account. Be sure to find out about the tax ramifications, your obligation for repayment, and early withdrawal penalties.
Ask for a gift from your family. First-time homebuyers are sometimes fortunate enough to get down payment help from gracious family members who may be eager to help them get into their first home. Your family members may be eager to help you reach the milestone of owning your first home.
Research housing finance agencies. Special mortgage programs are offered to buyers in certain circumstances, such as low income homebuyers or future homeowners looking to improve homes in a particular area, among others. With the help of this type of agency, you can get an interest rate that is below market, down payment assistance and other incentives. Housing finance agencies can help you with a lower interest rate, get you your down payment, and offer other assistance. The principal goal of non-profit housing finance agencies is to promote home ownership in targeted parts of the city.
Explore no-down and low-down mortgages.
- FHA loans
The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low to moderate-income individuals qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to get mortgages.
FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for a mortgage.
Interest rates for an FHA mortgage are typically the current interest rate, while the down payment with an FHA loan will be lower than those of conventional loans. The required down payment may go as low as three percent and the closing costs can be included in the mortgage.
- VA mortgage loans
VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which generally offers a competitive rate of interest, no down payment, and reduced closing costs. Although the VA does not finance the loans, it does certify eligibility to qualify for a VA loan.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes at the same time as the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The borrower pays the remaining 10%, rather than needing to pull together the usual 20% down payment.
- Carry-Back loans
In a "carry back" situation, the seller agrees to loan you a piece of his own equity to assist you with your down payment money. In this scenario, you would borrow the largest portion of the purchase price from a traditional lender and borrow the remainder from the seller. Often, this type of second mortgage will have higher interest.
The satisfaction will be the same, no matter which strategy you use to pull together the down payment. Your new home will be worth it!
Need to talk about down payment options? Call us at 954.920.9799.