Your Down Payment
Lots of borrowers qualify for a mortgage loan, but they don't have much to pay a down payment. Do you want to buy a new home, but don't know how to put together your down payment?
Tighten your belt and save. Scrutinize your budget to discover ways you can cut expenses to go toward your down payment. You also could enroll in an automatic savings plan to have a percentage of your pay automatically deposited into a savings account. You could look into some big expenses in your budget that you can live without, or reduce, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay close to home for your vacation.
Sell things you don't need and get a second job. Try to get a second job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the items you can put up for sale. A closetful of small things could add up to a fair amount at a garage or tag sale. You can also explore what any investments you have may bring if sold.
Borrow from your retirement funds. Research the details for your particular plan. Many homebuyers get down payment money by withdrawing what they need from their Individual Retirement Accounts or borrowing from 401(k) programs. Make sure you comprehend the tax ramifications, your obligation for repaying funds, and possible early withdrawal penalties.
Request a generous gift from family. First-time homebuyers somtimes get help with their down payment help from thoughtful parents and other family members who may be able to help them get into their own home. Your family members may be inclined to help you reach the milestone of having your own home.
Research housing finance agencies. Provisional mortgate loan programs are offered to buyers in certain circumstances, such as low income purchasers or future homeowners planning to remodel homes in a particular place, among others. Financing with this kind of agency, you probably will get an interest rate that is below market, down payment assistance and other incentives. Housing finance agencies may assist you with a lower rate of interest, get you your down payment, and offer other advantages. These non-profit programs were formed to boost community in particular neighborhoods.
Learn about low-down and no-down mortgages.
- Federal Housing Administration (FHA) mortgages
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low to moderate-income Americans qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting home financing.
FHA helps first-time homebuyers and others who would not be eligible for a typical loan by themselves, by offering mortgage insurance to the lenders.
Interest rates with an FHA loan are typically the current interest rate, but the down payment for an FHA loan will be less than those of conventional loans. The down payment may be as low as 3 percent and the closing costs can be covered by the mortgage.
- VA mortgages
With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This special loan does not require a down payment, has reduced closing costs, and offers a competitive rate of interest. Even though the mortgages aren't actually financed by the VA, the department verfifies borrowers by issuing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes along with the first. Most of the time, the piggyback loan is for 10 percent of the purchase price, while the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
In a "carry back" situation, the seller commits to loan you some of his home equity to help you get your down payment funds. In this scenario, you would borrow the largest portion of the purchase price from a traditional lender and borrow the remaining amount from the seller. Usually you'll pay a slightly higher interest rate on the loan financed by the seller.
No matter how you gather down payment money, the satisfaction of reaching the goal of living in your own home will be just as sweet!
Want to discuss down payments? Give us a call: (405) 615-8543.