Putting Together Your Down Payment
Lots of borrowers qualify for various loan programs, but they can't afford a large down payment. We have a few ideas
Cut expenses and save. Be on the look-out for ways to trim your monthly expenses to put away money for a down payment. There are bank programs in which some of your take-home pay is automatically deposited into savings every pay period. You could 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 decide to move into less expensive housing, or skip a family vacation.
Work a second job and sell things you don't need. Try to get a second job. This can be rough, but the temporary difficulty can provide your down payment money. Additionally, you can put together an exhaustive inventory of things you can sell. Unused gold jewelry can bring a good amount from local jewelers. You might own desirable items you can put up for sale on an online auction, or quality household items for a garage or tag sale. Also, you might want to consider selling any investments you hold.
Borrow funds from your retirement plan. Check the parameters of your particular plan. It is possible to borrow funds from a 401(k) for you down payment or perform a withdrawal from an Individual Retirement Account. Be sure you are clear about any penalties, the way this could affect on taxes, and repayment terms.
Ask for assistance from generous members of your family. First-time buyers are sometimes lucky enough to get help with their down payment help from gracious family members who are prepared to help them get into their own home. Your family members may be inclined to help you reach the goal of owning your own home.
Research housing finance agencies. Special mortgage loans are given to homebuyers in specific situations, such as low income buyers or future homeowners planning to remodel houses in a specific area, among others. Financing through this kind of agency, you can receive a below market interest rate, down payment assistance and other advantages. These types of agencies may assist you with a lower interest rate, help with your down payment, and provide other advantages. These non-profit programs to build up community in certain neighborhoods.
Learn about low-down and no-down mortgages.
- Federal Housing Administration (FHA) mortgages
The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low and moderate-income families get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in qualifying for mortgages.
FHA offers mortgage insurance to private lenders, enabling buyers who might not be eligible for a typical loan, to obtain financing.
Interest rates for an FHA loan usually feature the market interest rate, but the down payment amounts with an FHA mortgage will be lower than those of conventional loans. The down payment can be as low as three percent while the closing costs may be financed in the mortgage loan.
- VA mortgage loans
VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people are eligible for a VA loan, which generally offers a low interest rate, no down payment, and reduced closing costs. While it's true that the loans are not actually provided by the VA, the department certifies applicants by issuing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes with the first. Often the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. In contrast to the traditional 20 percent down payment, the buyer will just have to cover the remaining 10 percent.
- Carry-Back loans
With a carry-back mortgage, the you borrow part of the seller's home equity.. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Often, this type of second mortgage will have a higher rate of interest.
The feeling of accomplishment will be the same, no matter how you manage to pull together your down payment. Your new home will be your reward!
Want to discuss down payments? Give us a call at 720-598-8300.