Building Your Down Payment
Many borrowers can easily qualify for various loan programs, but they don't have much to pay a down payment. Do you want to look into getting a new house, but aren't sure how you should get together your down payment?
Reduce expenses and save. Scrutinize your budget to find ways you can cut expenses to save for your down payment. There are bank programs in which some of your take-home pay is automatically placed into a savings account each pay period. You might look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a vacation.
Work a second job and sell items you do not need. Try to find a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. In addition, you can put together a comprehensive inventory of items you may be able to sell. Unused gold jewelry can bring a good price from local jewelry stores. Multiple small things can add up to a fair amount 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. Some homebuyers get down payment money by withdrawing funds from IRAs or taking funds out of their 401(k) plans. Make sure you are knowledgable about any penalties, the way this may affect on income taxes, and repayment terms.
Ask for a generous gift from your family. First-time homebuyers somtimes receive down payment help from caring family members who may be eager to help them get into their own home. Your family members may be inclined to help you reach the goal of having your own home.
Research housing finance agencies. Special mortgate loan programs are given to buyers in specific situations, such as low income buyers or future homeowners planning to renovating houses in a targeted place, among others. With the help of a housing finance agency, you can receive a below market interest rate, down payment help and other advantages. Housing finance agencies may help eligible homebuyers with a lower rate of interest, get you your down payment, and provide other advantages. The primary purpose of not-for-profit housing finance agencies is build up home ownership in specific areas.
Explore no-down and low-down mortgage loans.
- 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 helping low to moderate-income families qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to get mortgages.
FHA assists first-time buyers and others who may not be able to qualify for a conventional loan on their own, by offering mortgage insurance to private lenders.
Interest rates with an FHA loan are normally the current interest rate, while the down payment requirements for an FHA loan will be smaller than those of conventional loans. The required down payment can be as low as three percent while the closing costs might be financed in the mortgage loan.
- VA mortgages
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 reduced closing costs. Although the mortgage loans are not actually financed by the VA, the office certifies applicants by providing eligibility certificates.
- Piggy-back loans
You can finance a down payment through a second mortgage that closes at the same time as the first. Usually the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. The borrower covers the remaining 10%, instead of needing to put together the usual 20% down payment.
- Carry-Back loans
In a "carry back" mortgage, the seller commits to loan you part of his own equity to assist you with your down payment money. You would finance the majority of the purchase price with a traditional mortgage lender and finance the remaining amount with the seller. Usually this type of second mortgage will have a higher rate of interest.
No matter how you gather your down payment, the satisfaction of reaching the goal of owning your own home will be just as great!
Need to talk about down payments? Give us a call at (334) 285-8850.