Building Your Down Payment
Lots of folks who are looking to purchase a new house can easily qualify for various loan programs, but they can't afford a large down payment. Below are a few straightforward ways to put together a down payment
Reduce expenses and save. Be on the look-out for ways you can trim your monthly expenditures to put away money for a down payment. You also might enroll in an automatic savings plan at your bank to automatically have a predetermined portion of your take-home pay moved into savings. You could look into some big expenses in your spending history that you can live without, or trim, at least temporarily. For example, you might move into less expensive housing, or skip a family vacation.
Sell things you do not need and get a part-time job. Maybe you can find an additional job to get your down payment money. You can also seriously consider the possessions you really need and the things you migh be able to put up for sale. You might have collectibles you can sell on an online auction, or quality household goods for a garage or tag sale. Also, you might want to think about selling any investments you hold.
Borrow funds from a retirement plan. Research the specifics of your individual plan. Many people get down payment money from withdrawing what they need from their IRAs or getting money out of their 401(k) programs. Make sure to find out about the tax ramifications, repayment terms, and any early withdrawal penalties.
Ask for help from generous family members. Many homebuyers somtimes receive help with their down payment help from thoughtful family members who are able to help get them in their own home. Your family members may be willing to help you reach the goal of buying your first home.
Learn about housing finance agencies. These types of agencies offer special mortgate loan programs to low and moderate-income buyers, buyers interested in remodeling a home within a particular part of the city, and other groups as specified by each finance agency. Working through this kind of agency, you can be given an interest rate that is below market, down payment help and other advantages. These types of agencies may help you with a reduced rate of interest, help with your down payment, and offer other assistance. The central goal of non-profit housing finance agencies is to promote residential ownership in specific places.
Learn about low-down and no-down mortgage loan programs.
- FHA mortgage loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in assisting low and moderate-income individuals qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in qualifying for mortgage loans.
FHA offers mortgage insurance to private lenders, ensuring the buyers are eligible for a loan.
Interest rates for an FHA mortgage are typically the going interest rate, while the down payment requirements for an FHA loan will be lower than those of conventional loans. Closing costs can be financed in the mortgage, while the down payment may be as low as 3 percent of the total.
- VA mortgages
With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan does not require a down payment, has mimimal closing costs, and offers a competitive interest rate. While the mortgage loans aren't actually financed by the VA, the office certifies borrowers by providing eligibility certificates.
- Piggy-back loans
You may fund a down payment through a second mortgage that closes at the same time as the first. Usually the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
With a carry-back mortgage, the you borrow a portion of the seller's home equity.. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Typically you'll pay a somewhat higher rate with the loan from the seller.
No matter how you gather down payment funds, the satisfaction of reaching the goal of owning your own home will be just as great!
Need to talk about the best options for down payments? Give us a call: (707) 252-2700.