Putting Together Your Down Payment
Many people who would like to purchase a new home qualify for various loan programs, but they don't have much to put up the standard down payment. Below are a few straightforward methods that will help you put together a down payment
Tighten your belt and save. Turn your budget inside out to discover extra money to go toward your down payment. You may also decide to enroll in an automatic savings plan to automatically have a specific amount from your paycheck moved into savings. You could look into some big expenses in your spending history that you can live without, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or stay close to home for your family vacation.
Sell items you do not really need and find a second job. Look for a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. Additionally, you can put together a comprehensive inventory of things you can sell. Unused gold jewelry can be sold at local jewelry stores. Multiple small things may add up to a fair amount at a garage or tag sale. You can also explore what your investments could bring if sold.
Tap into your retirement funds. Investigate the parameters of your particular program. Some homebuyers get down payment money by withdrawing from IRAs or pulling funds out of 401(k) programs. Be sure to find out about the tax consequences, repayment terms, and possible early withdrawal penalties.
Request a gift from your family. First-time homebuyers somtimes receive down payment assistance from thoughtful family members who are able to help get them in their own home. Your family members may be pleased to help you reach the milestone of owning your own home.
Learn about housing finance agencies. These types of agencies provide special loan programs to moderate and low income borrowers, buyers with an interest in rehabilitating a house within a targeted area, and other specific types of buyers as specified by the agency. Working through this type of agency, you probably will receive a below market interest rate, down payment help and other advantages. These kinds of agencies can help you with a reduced rate of interest, get you your down payment, and offer other advantages. The principal mission of not-for-profit housing finance agencies is to promote the purchase of homes in certain parts of the city.
Find out about low-down and no-down mortgage loans.
- FHA loans
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 to moderate-income buyers qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting mortgage loans.
FHA offers mortgage insurance to the private lenders, enabling buyers who might not qualify for a typical mortgage loan, to obtain a mortgage.
Interest rates for an FHA mortgage usually feature the going interest rate, while the down payment amounts with an FHA mortgage will be below those of conventional loans. Closing costs can be included in the mortgage, while the down payment may be as low as 3% of the purchase price.
- VA loans
With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This special loan requires no down payment, has mimimal closing costs, and provides the benefit of a competitive rate of interest. While the mortgage loans are not actually financed by the VA, the office verfifies borrowers by providing eligibility certificates.
- Piggy-back loans
You can finance a down payment using a second mortgage that closes with the first. Generally the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. The borrower pays the remaining 10%, rather than come up with the usual 20% down payment.
- Carry-Back loans
In a "carry back" mortgage, the seller commits to loan you a piece of his home equity to help you get your down payment funds. In this scenario, you would borrow the largest portion of the purchase price from a traditional lender and finance the remainder with the seller. Typically you will pay a somewhat higher interest rate on the loan from the seller.
No matter your strategy of putting together down payment money, the thrill of owning your own home will be just as sweet!
Want to discuss your down payment? Call us: (707) 252-2700.