Putting Together Your Down Payment
Lots of people who are looking to purchase a new home can easily qualify for several different kinds of mortgages, but they don't have a lot of money to pay the standard down payment. Do you want to look into getting a new house, but aren't sure how to put together your down payment?
Slash your budget and build up savings. Scrutinize your budget to find extra money to save for your down payment. You also could enroll in an automatic savings plan to automatically have a predetermined portion of your paycheck transferred into your savings account. You might look into some big expenses in your budget that you can live without, or trim, at least temporarily. For example, you might move into less expensive housing, or stay close to home for your vacation.
Work more and sell things you do not need. Try to find 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 things you may be able to put up for sale. A closetful of small things can add up to a fair amount at a garage or tag sale. You can also look into what your investments could sell for.
Borrow your down payment from a retirement plan. Research the details of your individual plan. Some people get down payment money by withdrawing funds from Individual Retirement Accounts or borrowing from their 401(k) plans. Be sure you comprehend the tax consequences, repayment terms, and penalties for withdrawing early.
Ask for assistance from generous members of your family. Many buyers are often lucky enough to receive help with their down payment assistance from gracious family members who are prepared to help get them in their first home. Your family members may be pleased to help you reach the milestone of having your first home.
Learn about housing finance agencies. These types of agencies offer special mortgate loan programs- for moderate and low income buyers, buyers interested in sprucing up a home in a specific area, and other certain kinds of buyers as specified by each finance agency. Working with a housing finance agency, you may be given a below market interest rate, down payment assistance and other perks. Housing finance agencies may assist eligible buyers with a lower interest rate, get you your down payment, and provide other advantages. The central purpose of non-profit housing finance agencies is promoting the purchase of homes in specific places.
Research 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 a significant role in assisting low and moderate-income Americans qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA provides mortgage insurance to the private lenders, enabling homebuyers who may not be eligible for a conventional loan, to obtain a mortgage.
Down payment sums for FHA loans are smaller than those with traditional mortgage loans, even though these loans hold average interest rates. Closing costs might be included in the mortgage, while the down payment may be as low as 3% of the purchase price.
- VA mortgages
Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This particular loan requires no down payment, has mimimal closing costs, and provides the advantage of a competitive interest rate. While the VA does not finance the mortgages, it does issue a certificate of eligibility to apply for a VA mortgage.
- Piggy-back loans
You may fund your down payment with a second mortgage that closes along with the first. Generally the piggyback loan is for 10 percent of the purchase price, while the first mortgage finances 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" mortgage, the seller commits to lend you some of his home equity to help you with your down payment money. In this scenario, you would finance the majority of the purchase price with a traditional lender and finance the remainder with the seller. Usually this kind of second mortgage will have higher interest.
The satisfaction will be the same, no matter how you manage to get together the down payment. Your new home will be worth it!
Need to talk about down payments? Call us: (334) 285-8850.