Your Down Payment
Many buyers qualify for several different kinds of mortgages, but they don't have a large sum of cash to put up a down payment. Here are a few methods that will help you put together a down payment
Reduce expenses and save. Scrutinize the budget to find ways you can cut expenses to save for your down payment. Also, you can look into bank programs in which some of your take-home pay is automatically transferred into a savings account each pay period. You could look into some big expenses in your spending history that you can do without, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or stay close to home for your annual vacation.
Work a second job and sell items you don't need. Perhaps you can find a second job to get your down payment money. You can also get creative about the items you can sell. Multiple small things could add up to a nice sum at a garage or tag sale. You might also explore what any investments you hold may bring if sold.
Borrow funds from your retirement plan. Investigate the parameters of your retirement program. Some people get down payment money by withdrawing what they need from Individual Retirement Accounts or taking funds out of 401(k) plans. Make sure you comprehend the tax consequences, your obligation for repayment, and possible early withdrawal penalties.
Ask for assistance from family members. Many buyers somtimes receive down payment help from caring parents and other family members who are anxious to help get them in their first home. Your family members may be inclined to help you reach the milestone of owning your first home.
Research housing finance agencies. These types of agencies provide special mortgate loan programs- for low and moderate-income buyers, buyers interested in renovating a house within a specific area, and additional particular kinds of buyers as defined by the agency. Working with this kind of agency, you may get an interest rate that is below market, down payment help and other advantages. These kinds of agencies may assist you with a lower interest rate, help with your down payment, and provide other assistance. These non-profit agencies exist to promote the value of homes in certain neighborhoods.
Research no-down and low-down mortgage loans.
- FHA loans
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low to moderate-income individuals get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to get mortgages.
FHA offers mortgage insurance to the private lenders, ensuring the buyers are eligible for a mortgage.
Down payment totals for FHA loans are below those with conventional mortgage loans, even though these mortgages come with average interest rates. Closing costs might be included in the mortgage, while the down payment might be as low as 3 percent of the total amount.
- VA mortgages
VA loans are backed by the Department of Veterans Affairs. Service persons and veterans are eligible for a VA loan, which typically offers a low fixed interest rate, no down payment, and limited closing costs. While it's true that the mortgages aren't actually provided by the VA, the office verfifies borrowers 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. Generally the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. Instead of the traditional 20 percent down payment, the buyer just has to pull together the remaining 10 percent.
- Carry-Back loans
In a "carry back" situation, the seller commits to loan you some of his own equity to help you with your down payment money. The buyer finances the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a somewhat higher rate with the loan financed by the seller.
No matter your method of putting together your down payment money, the thrill of owning your own home will be just as great!
Need to talk about the best options for down payments? Give us a call at 214-869-7339.