Putting Together Your Down Payment
Many buyers can qualify for several different kinds of mortgages, but they don't have a large sum of cash to pay a down payment. Below are a few straightforward ways to get together your down payment
Tighten your belt and save. Scrutinize your budget to discover ways you can cut expenses to save for your down payment. You could also try enrolling in an automatic savings plan at your bank to have a percentage of your payroll automatically deposited into your savings account. You would be wise to look into some big expenses in your budget that you can do without, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or stay close to home for your annual vacation.
Work more and sell items you do not need. Maybe you can get an additional job to get your down payment money. You can also seriously consider the possessions you really need and the items you may be able to sell. You may have desirable items you can put up for sale at an online auction, or quality household goods for a garage or tag sale. Also, you can think about selling any investments you own.
Borrow your down payment from a retirement plan. Research the details of your particular plan. Some homebuyers get down payment money from withdrawing funds from IRAs or borrowing from 401(k) programs. Make sure you know about any penalties, the way this may affect on your taxes, and repayment obligation.
Ask for assistance from generous members of your family. Many buyers somtimes get down payment assistance from thoughtful parents and other family members who may be prepared to help get them in their own home. Your family members may be pleased to help you reach the milestone of owning your first home.
Learn about housing finance agencies. Special loan programs are given to homebuyers in specific situations, like low income buyers or buyers planning to improve homes in a specific part of town, among others. With the help of this type of agency, you probably will receive an interest rate that is below market, down payment assistance and other advantages. These types of agencies can help eligible homebuyers with a reduced interest rate, help with your down payment, and offer other assistance. The primary purpose of not-for-profit housing finance agencies is boosting residence ownership in targeted areas.
Research no-down and low-down mortgage loan programs.
- FHA loans
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 to moderate-income families qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgages.
FHA aids first-time homebuyers and others who might not be eligible for a traditional loan by themselves, by offering mortgage insurance to the private lenders.
Down payment requirements for FHA loans are below those with typical mortgages, although these mortgages hold average rates of interest. Closing costs may be covered by the mortgage, and the down payment might be as low as 3% of the total.
- VA mortgage loans
With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This specialized loan requires no down payment, has reduced closing costs, and provides the benefit of a competitive interest rate. While the VA does not actually provide the mortgages, it does issue a certificate of eligibility to qualify for a VA loan.
- Piggy-back loans
You can finance your down payment through a second mortgage that closes along with the first. Most of the time, the piggyback loan is for 10 percent of the home's amount, and the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
In the case of the seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. You would borrow the largest portion of the purchase price from a traditional lending institution and borrow the remainder from the seller. Generally, this type of second mortgage will have a higher rate of interest.
The satisfaction will be the same, no matter how you manage to put together your down payment. Your new home will be your reward!
Need to talk about the best options for down payments? Call us at 305-967-7200.