Your Down Payment
Many buyers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Below are a few methods that will help you get together your down payment
Slash the budget and build up savings. Turn your budget inside out to find ways you can cut expenses to save for your down payment. You might also try enrolling in an automatic savings plan at your bank to have a portion of your pay automatically transferred 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 move into less expensive housing, or skip a vacation.
Work more and sell things you don't need. Perhaps 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 could be able to sell. Maybe you have desirable items you can put up for sale on an auction website, or quality household items for a tag or garage sale. You might also explore what your investments will sell for.
Borrow from your retirement funds. Explore the specifics for your individual plan. Many homebuyers get down payment money by withdrawing what they need from their Individual Retirement Accounts or borrowing from 401(k) plans. Be sure you are knowledgable about any penalties, the way this may affect on income taxes, and repayment terms.
Ask for a gift from your family. First-time homebuyers somtimes receive help with their down payment help from giving parents and other family members who may be prepared to help them get into their own home. Your family members may be eager to help you reach the goal of owning your first home.
Contact housing finance agencies. Provisional mortgage loans are extended to homebuyers in specific circumstances, such as low income purchasers or people looking to renovating houses in a specific place, among others. Financing with a housing finance agency, you can be given a below market interest rate, down payment help and other benefits. Housing finance agencies may help you with a lower interest rate, help with your down payment, and offer other assistance. These non-profit programs exist to promote the value of homes in specific neighborhoods.
Learn about low-down and no-down mortgage loan programs.
- 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 vital part in helping low to moderate-income Americans get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who wish to get mortgage loans.
FHA assists first-time homebuyers and others who may not be eligible for a traditional mortgage loan on their own, by providing mortgage insurance to the private lenders.
Down payment amounts for FHA loans are smaller than those of conventional mortgage loans, even though these loans hold average interest rates. The required down payment may go as low as 3 percent and the closing costs could be included in the mortgage loan.
- VA mortgages
With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This special loan does not require a down payment, has reduced closing costs, and offers a competitive interest rate. Although the VA doesn't actually provide the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.
- Piggy-back loans
You may fund your down payment through a second mortgage that closes with the first. Usually the piggyback loan takes care of 10 percent of the home's amount, and the first mortgage covers 80 percent. In contrast to the usual 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.
- Carry-Back loans
We a seller carries back a second mortgage, the seller loans you part of his or her equity. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a somewhat higher rate with the loan financed by the seller.
The satisfaction will be the same, no matter how you manage to pull together the down payment. Your brand new home will be your reward!
Want to discuss down payments? Call us at (707) 252-2700.