Your Down Payment
Lots of people who are looking to purchase a new house qualify for several different kinds of mortgages, but they don't have a lot of money to put up a down payment. Here are a few tips:
Reduce expenses and save. Look for ways to reduce your expenses to save toward a down payment. You could also try enrolling in an automatic savings plan to have a portion of your pay automatically transferred into your savings account. You would be wise to look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay local for your family vacation.
Sell things you do not really need and get a part-time job. Look for a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get creative about the items you can sell. A closetful of small things could add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you hold.
Borrow your down payment from a retirement plan. Check the provisions of your retirement program. It is possible to take out funds from a 401(k) for you down payment or withdraw from an Individual Retirement Account. Make sure you understand about any penalties, the way this could affect on your income taxes, and repayment obligation.
Ask for help from generous members of your family. First-time buyers are often fortunate enough to get down payment help from caring parents and other family members who may be able to help them get into their own home. Your family members may be eager to help you reach the goal of having your first home.
Learn about housing finance agencies. Provisional mortgage programs are provided to homebuyers in specific circumstances, like low income buyers or people planning to renovating homes in a certain neighborhood, among others. With the help of this type of agency, you may be given an interest rate that is below market, down payment help and other incentives. Housing finance agencies may help you with a lower interest rate, get you your down payment, and offer other assistance. These non-profit programs were formed to promote the value of homes in particular places.
Learn about low-down and no-down mortgages.
- 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 role in aiding low and moderate-income Americans get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get home financing.
FHA helps first-time buyers and others who might not be eligible for a traditional loan by themselves, by providing mortgage insurance to the lenders.
Interest rates with an FHA mortgage are normally the going interest rate, but the down payment with an FHA loan are less than those of conventional loans. Closing costs might be financed in the mortgage, while your down payment can be as low as 3% of the total amount.
- VA loans
VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which usually offers a low rate of interest, no down payment, and reduced closing costs. While it's true that the mortgages aren't actually issued by the VA, the department verfifies applicants by issuing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close at the same time as the first. Most of the time, the piggyback loan is for 10 percent of the home's price, and the first mortgage covers 80 percent. The homebuyer pays the remaining 10%, instead of come up with the usual 20% down payment.
- Carry-Back loans
In a "carry back" situation, the seller commits to lend you part of his own equity to help you get your down payment funds. You would finance the majority of the purchase price with a traditional mortgage lender and borrow the remainder from the seller. Often, this kind of second mortgage has a higher rate of interest.
No matter how you gather your down payment, the thrill of reaching the goal of owning your own home will be just as great!
Want to discuss down payments? Give us a call at 4056158543.