Your Down Payment
Lots of people who are looking 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. Here are a few methods that will help you get together a down payment
Tighten your belt and save. Scrutinize your budget to uncover extra money to save for your down payment. You also could enroll in an automatic savings plan at your bank to have a portion of your pay automatically moved into savings. You would be wise to look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or stay local for your annual vacation.
Work a second job and sell items you do not need. Perhaps you can get a second job and build up your earnings. Additionally, you can make a comprehensive inventory of things you can sell. Unused gold jewelry can bring a good amount from local jewelers. A closetful of small things might add up to a fair amount at a garage or tag sale. You could also research what your investments will bring if sold.
Borrow your down payment from a retirement plan. Check the parameters of your retirement program. Many people get down payment money from withdrawing funds from their Individual Retirement Accounts or borrowing from their 401(k) plans. Be sure to find out about the tax ramifications, your obligation for repaying the money, and any early withdrawal penalties.
Ask for a gift from family. Many homebuyers somtimes receive help with their down payment help from caring family members who may be prepared to help them get into their own home. Your family members may be pleased to help you reach the milestone of buying your first home.
Learn about housing finance agencies. These agencies provide special mortgage loans to moderate and low income homebuyers, buyers interested in renovating a home in a particular part of the city, and other groups as defined by each finance agency. With the help of this kind of agency, you probably will be given a below market interest rate, down payment assistance and other advantages. Housing finance agencies may assist eligible buyers with a reduced rate of interest, help with your down payment, and provide other assistance. The primary mission of non-profit housing finance agencies is boosting home ownership in specific places.
Research no-down and low-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 an important role in helping low and moderate-income buyers get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA offers mortgage insurance to the private lenders, enabling buyers who might not be eligible for a typical loan, to receive home financing.
Down payment amounts for FHA loans are less than those of typical mortgage loans, although these mortgages hold current rates of interest. Closing costs might be financed in the mortgage, while your down payment may be as low as 3% of the total.
- VA mortgage loans
With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This special loan requires no down payment, has mimimal closing costs, and offers a competitive interest rate. While the VA doesn't provide the mortgage loans, it does certify eligibility to apply for a VA mortgage.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes with the first. Generally the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, instead of come up with the typical 20% down payment.
- Carry-Back loans
In the case of the seller "carrying back a second mortgage," the seller loans you part of his or her home equity. You would borrow the majority of the purchase price from a traditional mortgage lender and borrow the remainder from the seller. Typically you will pay a slightly higher rate on the loan from the seller.
No matter how you gather your down payment money, the satisfaction of reaching the goal of owning your own home will be just as sweet!
Need to talk about the best options for down payments? Call us: (707) 252-2700.