Your Down Payment
Many borrowers can qualify for various loan programs, but they don't have a lot of cash to put up the standard down payment. Here are a few methods that will help you get together your down payment
Slash the budget and build up savings. Look for ways to trim your monthly expenses to save toward a down payment. There are bank programs in which some of your take-home pay is automatically deposited into savings each pay period. You might look into some big expenses in your spending history that you can give up, or trim, at least temporarily. For example, you might move into less expensive housing, or stay close to home for your vacation.
Work more and sell things you do not need. Look for an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the things you can put up for sale. Maybe you own desirable items you can sell on an auction website, or household items for a tag or garage sale. Also, you might want to look into selling any investments you own.
Borrow from retirement funds. Investigate the provisions of your particular program. Some homebuyers get down payment money from withdrawing from their Individual Retirement Accounts or getting funds out of their 401(k) programs. Be sure you know about any penalties, the way this will affect on your income taxes, and repayment obligation.
Ask for a gift from family. First-time homebuyers are often fortunate enough to get down payment help from thoughtful parents and other family members who may be able to help get them in their first home. Your family members may be willing to help you reach the milestone of owning your own home.
Contact housing finance agencies. Provisional mortgage loans are extended to buyers in specific circumstances, such as low income buyers or homebuyers planning to renovating houses in a targeted place, among others. With the help of a housing finance agency, you may get an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies can assist you with a reduced rate of interest, get you your down payment, and offer other assistance. These non-profit agencies to boost the value of homes in particular places.
Explore no-down and low-down mortgage loan programs.
- FHA mortgage 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 families get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA provides mortgage insurance to private lenders, enabling buyers who may not be eligible for a typical loan, to get a mortgage.
Down payment totals for FHA loans are smaller than those of typical mortgages, even though these loans come with average rates of interest. The down payment may be as low as three percent while the closing costs might be covered by the mortgage.
- VA loans
VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people are eligible for a VA loan, which usually offers a competitive fixed interest rate, no down payment, and minimal closing costs. While the VA does not provide the mortgages, it does issue a certificate of eligibility to apply for a VA loan.
- Piggy-back loans
You may fund your down payment using a second mortgage that closes along with the first. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. Rather than the usual 20 percent down payment, the buyer just has to cover the remaining 10 percent.
- Carry-Back loans
In a "carry back" agreement, the seller commits to loan you part of his own 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 mortgage lending institution and borrow the remainder from the seller. Typically you will pay a somewhat higher rate on the loan financed by the seller.
No matter your method of getting together your down payment, the satisfaction of owning your own home will be just as great!
Want to discuss your down payment? Call us at (707) 252-2700.