Building Your Down Payment
Lots of people who would like to buy a new house qualify for various loan programs, but they can't afford a large down payment. Do you want to buy a new house, but don't know how you should get together a down payment?
Cut expenses and save. Scrutinize the budget to discover ways you can cut expenses to go toward your down payment. You might also try enrolling in an automatic savings plan to have a percentage of your payroll automatically deposited into a savings account. You could look into some big expenses in your spending history that you can do without, or trim, at least temporarily. For example, you may move into less expensive housing, or skip a vacation.
Sell things you don't really need and find a second job. Look for a second job. This can be rough, but the temporary difficulty can provide your down payment money. In addition, you can make an exhaustive list of items you can sell. Broken gold jewelry can bring a good amount from local jewelers. Maybe you have desirable items you can sell at an auction website, or household items for a tag or garage sale. You can also look into what any investments you hold may sell for.
Borrow from your retirement funds. Research the specifics for your individual plan. Some homebuyers get down payment money from withdrawing what they need from their IRAs or getting money out of their 401(k) plans. You will need to be sure you understand about any penalties, the way this will affect on income taxes, and repayment obligation.
Ask for help from family members. Many homebuyers somtimes get help with their down payment assistance from giving parents and other family members who may be prepared to help get them in their first home. Your family members may be pleased to help you reach the milestone of having your first home.
Research housing finance agencies. These agencies extend special loan programs to moderate and low income borrowers, buyers with an interest in renovating a home in a specific part of the city, and additional specific types of buyers as defined by the agency. Financing with a housing finance agency, you probably will be given a below market interest rate, down payment help and other advantages. Housing finance agencies can help eligible homebuyers with a lower interest rate, help with your down payment, and provide other advantages. These non-profit programs were established to boost home ownership in specific areas.
Explore no-down and low-down mortgage loan programs.
- Federal Housing Administration (FHA) mortgage loans
The Federal Housing Administration (FHA), a 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 mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting mortgages.
FHA provides mortgage insurance to the private lenders, helping the buyers to become eligible for a home loan.
Interest rates for an FHA loan usually feature the market interest rate, while the down payment requirements for an FHA mortgage are less than those of conventional loans. The down payment may be as low as three percent and the closing costs might be packaged in the mortgage.
- VA mortgage loans
VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which usually offers a reasonable interest rate, no down payment, and minimal closing costs. While the loans are not actually provided by the VA, the office verfifies applicants by issuing eligibility certificates.
- Piggy-back loans
You can finance your down payment using a second mortgage that closes at the same time as the first. Generally the piggyback loan takes care of 10 percent of the purchase price, while the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, instead of putting the usual 20% down payment.
- Carry-Back loans
In a "carry back" mortgage, the seller agrees to loan you part of his home equity to help you with your down payment money. The buyer finances the majority of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Usually you will pay a slightly higher rate with the loan from the seller.
No matter how you gather your down payment, the satisfaction of reaching the goal of living in your own home will be just as great!
Want to discuss down payment options? Call us: 720-598-8300.