Putting Together Your Down Payment
Many borrowers qualify for several different kinds of mortgages, but they don't have much to pay a down payment. Here are a few methods that will help you put together a down payment
Slash the budget and build up savings. Scrutinize the budget to find extra money to go toward your down payment. Also, you can look into bank programs through which a specific portion of your paycheck is automatically placed into a savings account every pay period. Some practical ways to build up funds include moving into less expensive housing, and skipping your vacation for a year or two.
Work more and sell things you don't need. Look for an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the items you could be able to sell. Maybe you have desirable items you can sell at an online auction, or quality household goods for 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. It is possible to take out money from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Be sure you comprehend the tax consequences, your obligation for repayment, and any early withdrawal penalties.
Ask for a gift from family. First-time buyers somtimes receive help with their down payment assistance from thoughtful family members who may be willing to help them get into their first home. Your family members may be pleased at the chance to help you reach the milestone of buying your own home.
Learn about housing finance agencies. These types of agencies provide special loan programs to low and moderate-income buyers, buyers interested in remodeling a house within a particular area, and additional groups as defined by each finance agency. With the help of this kind of agency, you probably will be given a below market interest rate, down payment help and other incentives. These kinds of agencies may help you with a lower rate of interest, get you your down payment, and offer other benefits. The primary purpose of non-profit housing finance agencies is boosting residence ownership in particular areas.
Learn about low-down and no-down mortgages.
- FHA loans
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in aiding low to moderate-income buyers qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to get home financing.
FHA provides mortgage insurance to private lenders, making the buyers eligible for financing.
Interest rates for an FHA loan usually feature the market interest rate, while the down payment amounts for an FHA loan will be below those of conventional loans. Closing costs may be covered by the mortgage, while the down payment might be as low as 3% of the purchase price.
- VA mortgages
VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a low fixed interest rate, no down payment, and reduced closing costs. Although the mortgage loans are not actually provided by the VA, the department certifies borrowers by issuing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close at the same time as the first. Often the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, instead of needing to put together the typical 20% down payment.
- Carry-Back loans
In a "carry back" situation, the seller agrees to loan you a portion of his own equity to help you get your down payment funds. In this scenario, you would finance the majority of the purchase price with a traditional mortgage lender and finance the remaining amount with the seller. Typically you will pay a somewhat higher rate on the loan from the seller.
No matter how you gather your down payment, the thrill of reaching the goal of living in your own home will be just as sweet!
Want to discuss down payment options? Call us at 561-395-4264.