Putting Together Your Down Payment
Many borrowers can easily qualify for several different kinds of mortgages, but they don't have a lot of cash to put up the standard down payment. Get started here
Cut expenses and save. Look for ways to reduce your monthly expenses to set aside funds for a down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a predetermined amount from your take-home pay transferred into your savings account. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or stay local for your annual vacation.
Work a second job and sell items you don't need. Try to get a second job. This can be rough, but the temporary trial can provide your down payment money. You can also get creative about the items you migh be able to put up for sale. A closetful of small things could add up to a fair amount at a garage or tag sale. You might also research what any investments you have may sell for.
Borrow from retirement funds. Explore the specifics of your individual plan. You may pull out funds from a 401(k) plan for you down payment or withdraw from an IRA. Make sure you comprehend the tax consequences, your obligation for repayment, and penalties for withdrawing early.
Ask for help from generous members of your family. Many buyers somtimes get down payment assistance from gracious parents and other family members who may be willing to help them get into their own home. Your family members may be happy at the chance to help you reach the goal of owning your own home.
Contact housing finance agencies. These agencies offer special mortgage programs for low and moderate-income buyers, buyers interested in sprucing up a residence within a targeted area, and additional certain kinds of buyers as defined by each agency. With the help of a housing finance agency, you may get an interest rate that is below market, down payment help and other incentives. Housing finance agencies can help eligible homebuyers with a lower rate of interest, help with your down payment, and offer other benefits. These non-profit programs exist to boost home ownership in certain areas.
Explore no-down and low-down mortgage loans.
- FHA mortgages
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low to moderate-income buyers qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to get mortgage loans.
FHA helps first-time homebuyers and others who might not be eligible for a typical mortgage on their own, by offering mortgage insurance to the lenders.
Interest rates with an FHA loan are generally the going interest rate, but the down payment amounts for an FHA loan will be lower than those of conventional loans. The required down payment may go as low as 3 percent and the closing costs can be covered by the mortgage loan.
- VA mortgages
With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This particular loan requires no down payment, has limited closing costs, and offers a competitive interest rate. While the VA doesn't actually provide the mortgages, it does certify eligibility to apply for a VA loan.
- Piggy-back loans
You can finance a down payment using a second mortgage that closes at the same time as the first. Generally the piggyback loan is for 10 percent of the purchase price, and the first mortgage finances 80 percent. In contrast to the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
In a "carry back" mortgage, the seller commits to loan you some of his own equity to assist you with your down payment money. The buyer funds most of the purchase price with 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 approach you use to come up with your down payment. Your new home will be your reward!
Want to discuss the best options for down payments? Call us at 561-395-4264.