Your Down Payment
Many buyers qualify for a loan, but they can't afford a large down payment. Want to buy a new house, but aren't sure how you should get together a down payment?
Tighten your belt and save. Scrutinize your budget to discover ways you can cut expenses to go toward your down payment. There are bank programs in which some of your take-home pay is automatically placed into a savings account every pay period. Some practical strategies to put together funds include moving into less expensive housing, and staying home for your family vacation this year.
Work more and sell things you do not need. Look for a second job. This can be rough, but the temporary trial can provide your down payment money. Additionally, you can put together a comprehensive inventory of things you may be able to sell. Unused gold jewelry can be sold at local jewelers. Maybe you own collectibles you can put up for sale at an online auction, or quality household items for a garage or tag sale. You can also explore what any investments you hold could bring if sold.
Borrow from your retirement plan. Research the details of your particular plan. It is possible to borrow funds from a 401(k) plan for a down payment or withdraw from an IRA. Make sure you comprehend the tax ramifications, your obligation for repayment, and early withdrawal penalties.
Ask for help from members of your family. First-time homebuyers are sometimes lucky enough to get down payment assistance from gracious family members who may be willing to help get them in their own home. Your family members may be eager to help you reach the goal of owning your own home.
Learn about housing finance agencies. These agencies offer provisional mortgate loan programs- for low and moderate-income buyers, buyers with an interest in rehabilitating a residence in a targeted area, and other groups as defined by each finance agency. Financing through a housing finance agency, you probably will get an interest rate that is below market, down payment assistance and other benefits. These kinds of agencies may help you with a reduced interest rate, get you your down payment, and offer other advantages. The principal mission of not-for-profit housing finance agencies is promoting home ownership in particular areas.
Research no-down and low-down mortgage loans.
- FHA mortgage 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 and moderate-income buyers qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting mortgage loans.
FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a loan.
Interest rates with an FHA loan usually feature the going interest rate, but the down payment for an FHA mortgage will be less than those of conventional loans. The down payment may be as low as three percent and the closing costs could be packaged in the mortgage.
- 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 limited closing costs, and offers a competitive interest rate. Although the VA doesn't actually finance the loans, it does certify eligibility to qualify for a VA mortgage.
- Piggy-back loans
You can finance a down payment with a second mortgage that closes at the same time as the first. Generally the piggyback loan takes care of 10 percent of the home's price, while the first mortgage finances 80 percent. The borrower pays the remaining 10%, instead of needing to put together the usual 20% down payment.
- Carry-Back loans
In a "carry back" agreement, the seller agrees to lend you a portion of his home equity to assist you with your down payment money. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a slightly higher rate with the loan from the seller.
No matter your strategy of getting together your down payment, the satisfaction of reaching the goal of living in your own home will be just as great!
Need to talk about your down payment? Give us a call at 561-395-4264.