Building Your Down Payment
Lots of people who are looking to buy a new home qualify for a loan, but they can't afford a large down payment. Below are a few straightforward ways to get together your down payment
Tighten your belt and save. Look for ways you can trim your expenses to set aside funds for a down payment. There are bank programs in which a portion of your take-home pay is automatically deposited into savings each pay period. Some effective approaches to put together funds include moving into less expensive housing, and staying home for your vacation this year.
Sell things you don't really need and find a second job. Try to find a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get serious about the possessions you actually need and the items you may be able to sell. You may own desirable items you can sell on an online auction, or household goods for a tag or garage sale. You can also research what any investments you have could sell for.
Borrow your down payment from your retirement plan. Explore the details of your individual plan. Many people get down payment money by withdrawing what they need from their Individual Retirement Accounts or taking funds out of their 401(k) programs. Make sure you comprehend the tax ramifications, your obligation for repaying funds, and any penalties for withdrawing early.
Ask for a gift from your family. Many homebuyers somtimes get help with their down payment help from thoughtful family members who are prepared to help them get into their first home. Your family members may be pleased to help you reach the goal of owning your own home.
Contact housing finance agencies. Special mortgage programs are offered to buyers in certain situations, such as low income homebuyers or future homeowners planning to improve homes in a particular area, among others. Working through a housing finance agency, you may be given a below market interest rate, down payment help and other advantages. Housing finance agencies can assist eligible buyers with a lower interest rate, help with your down payment, and provide other assistance. The primary purpose of non-profit housing finance agencies is boosting the purchase of homes in specific parts of the city.
Find out about low-down and no-down mortgages.
- Federal Housing Administration (FHA) mortgage loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a critical role in assisting low to moderate-income buyers get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA assists first-time homebuyers and others who would not be able to qualify for a traditional mortgage loan on their own, by providing mortgage insurance to the private lenders.
Interest rates for an FHA loan typically feature the going interest rate, while the down payment for an FHA loan will be smaller than those of conventional loans. The required down payment may go as low as three percent while the closing costs may be covered by the mortgage.
- VA mortgages
With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan requires no down payment, has mimimal closing costs, and provides the benefit of a competitive rate of interest. Even though the loans are not actually provided by the VA, the department certifies applicants by issuing eligibility certificates.
- Piggy-back loans
You can fund a down payment using a second mortgage that closes along with the first. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. Instead of the traditional 20 percent down payment, the buyer will just have to cover the remaining 10 percent.
- Carry-Back loans
With a carry-back mortgage, the seller loans you part of his or her equity. You would borrow the largest portion of the purchase price from a traditional lending institution and finance the remainder with the seller. Typically, this form of second mortgage will have a higher rate of interest.
No matter your strategy of pulling together your down payment, the satisfaction of reaching the goal of living in your own home will be just as sweet!
Want to discuss your down payment? Give us a call: 305-967-7200.