Your Down Payment
Lots of borrowers qualify for several different kinds of mortgages, but they can't afford a large down payment. Below are a few straightforward ways to get together a down payment
Reduce expenses and save. Look for ways to trim your monthly expenses to set aside funds for a down payment. Also, you can look into bank programs through which some of your paycheck is automatically transferred into a savings account every pay period. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a family vacation.
Sell things you don't really need and find a second job. Look for a second job. This can be exhausting, but the temporary trial can help you get your down payment. You can also get creative about the things you can put up for sale. Multiple small things can add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you hold.
Borrow money from a retirement plan. Explore the details of your individual plan. Many homebuyers get down payment money from withdrawing funds from their Individual Retirement Accounts or taking money out of their 401(k) plans. Be sure you understand the tax consequences, your obligation for repayment, and penalties for withdrawing early.
Request a gift from your family. Many buyers somtimes receive down payment help from caring parents and other family members who are prepared to help them get into their own home. Your family members may be willing to help you reach the milestone of owning your own home.
Contact housing finance agencies. Special mortgage loans are provided to homebuyers in certain situations, like low income homebuyers or future homeowners looking to renovating homes in a certain part of town, among others. Financing through a housing finance agency, you can be given a below market interest rate, down payment help and other incentives. Housing finance agencies may help eligible homebuyers with a reduced rate of interest, get you your down payment, and offer other advantages. The principal purpose of not-for-profit housing finance agencies is to promote the purchase of homes in targeted places.
Find out about low-down and no-down mortgage loan programs.
- FHA mortgage loans
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income Americans qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting mortgages.
FHA provides mortgage insurance to the private lenders, enabling buyers who might not be eligible for a typical loan, to get home financing.
Interest rates for an FHA loan are normally the current interest rate, while the down payment for an FHA mortgage are below those of conventional loans. The required down payment may be as low as 3 percent while the closing costs could be packaged in the mortgage loan.
- VA mortgages
With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan requires no down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. While the mortgage loans don't originate from the VA, the department certifies applicants by providing eligibility certificates.
- Piggy-back loans
You may fund a down payment using a second mortgage that closes with the first. Most of the time, the piggyback loan is for 10 percent of the home's price, while the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, rather than putting the usual 20% down payment.
- Carry-Back loans
In a "carry back" situation, the seller agrees to lend you part of his own equity to help you with your down payment funds. In this scenario, you would borrow the majority of the purchase price from a traditional lender and borrow the remaining amount from the seller. Usually you will pay a somewhat higher interest rate on the loan from the seller.
The feeling of accomplishment will be the same, no matter which strategy you use to come up with your down payment. Your brand new home will be worth it!
Want to discuss your down payment? Give us a call: 4056158543.