Building Your Down Payment
Many folks who are looking to purchase a new home can easily qualify for a loan, but they don't have a lot of money to pay the standard down payment. Do you want to look into getting a new home, but don't know how you should put together your down payment?
Slash your budget and build up savings. Be on the look-out for ways you can reduce your monthly expenditures to save toward a down payment. You also might enroll in an automatic savings plan at your bank to have a portion of your pay automatically transferred into savings. Some practical approaches to put together funds include moving into less expensive housing, and staying home for your vacation for a year or two.
Sell things you do not really need and get a second job. Perhaps you can get a second job to get your down payment money. You can also get creative about the items you can put up for sale. A closetful of small items might add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you hold.
Borrow money from a retirement plan. Check the parameters of your retirement plan. You can borrow funds from a 401(k) plan for you down payment or perform a withdrawal from an IRA. Make sure you understand about any penalties, the way this may affect on income taxes, and repayment obligation.
Request a gift from your family. Many homebuyers somtimes get help with their down payment assistance from gracious family members who may be anxious to help get them in their first home. Your family members may be pleased at the chance to help you reach the goal of having your first home.
Contact housing finance agencies. These agencies provide special loan programs for moderate and low income buyers, buyers interested in remodeling a residence in a particular part of the city, and additional groups as specified by the finance agency. Financing through this kind of agency, you may be given an interest rate that is below market, down payment assistance and other benefits. These kinds of agencies may help eligible homebuyers with a reduced rate of interest, help with your down payment, and provide other assistance. These non-profit agencies to build up the value of homes in particular neighborhoods.
Learn 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 helping low and moderate-income Americans qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to qualify for mortgages.
FHA aids first-time homebuyers and others who may not be eligible for a typical loan on their own, by providing mortgage insurance to the lenders.
Down payment totals for FHA mortgages are smaller than those with typical mortgages, although these loans come with average rates of interest. Closing costs can be financed within the mortgage, and your down payment could be as low as 3 percent of the total amount.
- VA loans
Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This particular loan does not require a down payment, has mimimal closing costs, and provides a competitive interest rate. Although the VA does not actually provide the mortgages, it does issue a certificate of eligibility to qualify for a VA mortgage.
- Piggy-back loans
You can fund your down payment with a second mortgage that closes along with the first. Usually the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. The homebuyer pays 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 part of the seller's home equity.. In this scenario, you would borrow the largest portion of the purchase price from a traditional mortgage lending institution and borrow the remainder from the seller. Typically you will pay a somewhat higher rate on the loan financed by the seller.
The feeling of accomplishment 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? Give us a call at 7068605514.