Your Down Payment
Lots of folks who are looking to purchase a new house can easily qualify for several different kinds of mortgages, but they don't have a large sum of cash to pay a down payment. Below are a few ways to get together a down payment
Slash your budget and build up savings. Scrutinize the budget to find extra money to go toward your down payment. There are bank programs in which some of your take-home pay is automatically placed into savings every pay period. You could look into some big expenses in your spending history 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 local for your annual vacation.
Sell items you don't need and get a part-time job. Try to get an additional 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 can sell. Multiple small things may add up to a fair amount at a garage or tag sale. Also, you can look into selling any investments you own.
Borrow money from a retirement plan. Check the provisions of your specific program. It is possible to pull out money from a 401(k) for a down payment or withdraw from an IRA. Be sure you know about any penalties, the effect this could have on your taxes, and repayment terms.
Request a generous gift from family. Many homebuyers somtimes receive help with their down payment assistance from gracious parents and other family members who may be willing to help them get into their first home. Your family members may be pleased at the chance to help you reach the milestone of owning your own home.
Learn about housing finance agencies. These agencies provide provisional loan programs to low and moderate-income homebuyers, buyers with an interest in sprucing up a residence in a targeted area, and other specific kinds of buyers as specified by the agency. With the help of this type of agency, you can get an interest rate that is below market, down payment help and other perks. Housing finance agencies can help you with a reduced interest rate, get you your down payment, and provide other advantages. The main purpose of non-profit housing finance agencies is boosting home ownership in certain areas.
Research no-down and low-down mortgage loans.
- Federal Housing Administration (FHA) loans
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low to moderate-income Americans get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA helps first-time homebuyers and others who would not be eligible for a conventional mortgage by themselves, by offering mortgage insurance to the private lenders.
Down payment requirements for FHA loans are less than those with conventional mortgage loans, even though these mortgages hold current interest rates. Closing costs may be covered by the mortgage, while your down payment might be as low as 3% of the total.
- VA loans
Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This special loan does not require a down payment, has reduced closing costs, and provides the benefit of a competitive interest rate. Even though the VA doesn't finance the mortgages, it does certify eligibility to apply for a VA mortgage.
- Piggy-back loans
You may finance your down payment using a second mortgage that closes along with the first. Usually the piggyback loan is for 10 percent of the home's amount, while the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.
- Carry-Back loans
In the option of a seller "carrying back a second mortgage," the seller loans you part of his or her equity. In this scenario, you would borrow the largest portion of the purchase price from a traditional mortgage lender and finance the remaining amount with the seller. Usually you'll pay a somewhat higher interest rate with the loan from the seller.
No matter your method of pulling together your down payment money, the satisfaction of owning your own home will be just as sweet!
Want to discuss the best options for down payments? Give us a call at (334) 285-8850.