Putting Together Your Down Payment
Lots of folks who would like to purchase a new house qualify for various loan programs, but they don't have a lot of money to pay the standard down payment. We have a few ideas
Cut expenses and save. Turn your budget upside-down to uncover ways you can cut expenses to save for your down payment. You could also try enrolling in an automatic savings plan to automatically have a predetermined portion of your take-home pay deposited into a savings account. Some effective approaches to put together funds include moving into less expensive housing, and skipping your family vacation for a year or two.
Work more and sell items you don't need. Look for an additional job. This can be exhausting, but the temporary trial can provide your down payment money. You can also seriously consider the possessions you actually need and the things you can sell. You may own desirable items you can sell at an online auction, or quality household goods for a tag or garage sale. Also, you can look into selling any investments you hold.
Borrow from a retirement plan. Check the parameters of your particular program. Some homebuyers get down payment money by withdrawing funds from their Individual Retirement Accounts or borrowing from 401(k) plans. Make sure you are knowledgable about any penalties, the effect this could have on your income taxes, and repayment obligation.
Request a generous gift from your family. First-time homebuyers are sometimes fortunate enough to get help with their down payment assistance from giving parents and other family members who may be able to help them get into their own home. Your family members may be inclined to help you reach the milestone of having your own home.
Contact housing finance agencies. Provisional mortgate loan programs are extended to buyers in specific circumstances, such as low income purchasers or future homeowners looking to improve houses in a specific neighborhood, among others. With the help of this type of agency, you probably will be given an interest rate that is below market, down payment help and other advantages. Housing finance agencies can help eligible buyers with a lower rate of interest, help with your down payment, and provide other advantages. These non-profit programs were formed to build up home ownership in specific places.
Find out about low-down and no-down mortgages.
- Federal Housing Administration (FHA) mortgages
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in assisting low and moderate-income Americans get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in qualifying for mortgages.
FHA offers mortgage insurance to private lenders, ensuring the buyers are eligible for a loan.
Down payment amounts for FHA loans are smaller than those with typical mortgages, although these loans have current interest rates. Closing costs can be covered by the mortgage, and your down payment can 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 advantage of a competitive interest rate. Although the VA doesn't actually provide the mortgages, it does certify eligibility to apply for a VA loan.
- 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 cost of the home and the "piggyback" is for 10%. In contrast to the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.
- Carry-Back loans
With a carry-back mortgage, the seller loans you part of his or her home equity. In this scenario, you would borrow the majority of the purchase price from a traditional lender and borrow the remaining amount from the seller. Typically, this kind of second mortgage will have a higher rate of interest.
No matter your strategy of pulling together your down payment, the satisfaction of reaching the goal of owning your own home will be just as sweet!
Need to talk about down payment options? Give us a call: 214-869-7339.