Your Down Payment
Many folks who are looking to buy a new house qualify for a loan, but they can't afford a large down payment. Below are a few methods that will help you put 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. Also, you can look into bank programs in which a specific portion of your paycheck is automatically deposited into a savings account every pay period. You would be wise to look into some big expenses in your spending history that you can do without, or trim, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or skip a family vacation.
Work more and sell things you do not need. Look for an additional job. This can be exhausting, but the temporary difficulty can help you get your down payment. Additionally, you can make an exhaustive inventory of things you can sell. Broken gold jewelry can bring a good price from local jewelry stores. You may have desirable items you can sell at an auction website, or quality household items for a tag or garage sale. You can also research what your investments will sell for.
Borrow from a retirement plan. Research the details of your individual plan. Some people get down payment money by withdrawing from their Individual Retirement Accounts or borrowing from 401(k) programs. Be sure to ask your plan representative about the tax ramifications, your obligation for repaying the money, and possible early withdrawal penalties.
Request a generous gift from your family. First-time buyers somtimes receive down payment help from gracious parents and other family members who may be prepared to help them get into their own home. Your family members may be pleased at the chance to help you reach the goal of buying your first home.
Research housing finance agencies. Provisional mortgage loans are given to buyers in certain circumstances, such as low income homebuyers or future homeowners planning to remodel houses in a particular place, among others. With the help of a housing finance agency, you probably will receive a below market interest rate, down payment help and other benefits. Housing finance agencies can help eligible homebuyers with a lower rate of interest, help with your down payment, and provide other assistance. These non-profit programs were formed to promote home ownership in certain neighborhoods.
Find out about low-down and no-down mortgage loan programs.
- FHA mortgages
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 buyers qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who need to qualify for mortgage loans.
FHA aids first-time buyers and others who would not be eligible for a conventional mortgage loan by themselves, by offering mortgage insurance to lenders.
Interest rates for an FHA loan normally feature the going interest rate, but the down payment with an FHA loan will be below those of conventional loans. The down payment can go as low as 3 percent while the closing costs could be financed in the mortgage.
- VA mortgage loans
VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can get a VA loan, which usually offers a low rate of interest, no down payment, and minimal closing costs. Although the loans are not actually financed by the VA, the office verfifies borrowers by providing eligibility certificates.
- Piggy-back loans
You may finance your down payment with a second mortgage that closes with the first. Usually the piggyback loan is for 10 percent of the home's price, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, rather than putting the typical 20% down payment.
- Carry-Back loans
In a "carry back" agreement, the seller agrees to loan you a piece of his home equity to help you with your down payment funds. In this scenario, you would borrow the largest portion of the purchase price from a traditional lending institution and borrow the remainder from the seller. Typically, this type of second mortgage will have a higher rate of interest.
No matter how you gather your down payment money, the thrill of reaching the goal of owning your own home will be just as sweet!
Want to discuss down payments? Call us at 4787462063.