Your Down Payment
Lots of people who are looking to buy a new house can qualify for various loan programs, but they don't have a lot of money to put up the standard down payment. Here are a few ways to get together your down payment
Slash the budget and build up savings. Scrutinize your budget to discover ways you can cut expenses to go toward your down payment. You also could enroll in an automatic savings plan to have a portion of your pay automatically transferred into savings. Some effective ways to build up funds include moving into less expensive housing, and skipping your family vacation for a year or two.
Sell items you don't really need and get a second job. Try to get an additional job. This can be exhausting, but the temporary difficulty can help you get your down payment. In addition, you can put together an exhaustive inventory of items you can sell. Unworn gold jewelry can be sold at local jewelry stores. Multiple small items could add up to a fair amount at a garage or tag sale. You could also explore what any investments you own may bring if sold.
Borrow from retirement funds. Explore the specifics of your particular plan. Many people get down payment money by withdrawing from Individual Retirement Accounts or taking money out of 401(k) plans. Make sure you understand about any penalties, the effect this could have on your income taxes, and repayment terms.
Ask for assistance from generous family members. Many homebuyers are sometimes lucky enough to get down payment help from thoughtful family members who may be willing to help them get into their own home. Your family members may be happy at the chance to help you reach the milestone of owning your own home.
Contact housing finance agencies. Provisional mortgage loans are given to buyers in specific situations, such as low income purchasers or homebuyers looking to renovating homes in a particular neighborhood, among others. Working with a housing finance agency, you can get an interest rate that is below market, down payment assistance and other incentives. Housing finance agencies may help eligible buyers with a lower rate of interest, help with your down payment, and provide other benefits. These non-profit agencies to build up community in particular neighborhoods.
Explore no-down and low-down mortgage loans.
- Federal Housing Administration (FHA) loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low and moderate-income Americans qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to qualify for mortgages.
FHA helps first-time buyers and others who might not be able to qualify for a conventional mortgage on their own, by offering mortgage insurance to the lenders.
Interest rates with an FHA loan are generally the market interest rate, but the down payment requirements for an FHA loan are less than those of conventional loans. Closing costs can be included in the mortgage, and your down payment may be as low as 3 percent of the total.
- VA loans
With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This particular loan requires no down payment, has limited closing costs, and offers a competitive rate of interest. While the mortgages don't originate from the VA, the department certifies borrowers by providing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close along with the first. In most cases the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. The homebuyer covers the remaining 10%, instead of come up with the typical 20% down payment.
- Carry-Back loans
In a "carry back" mortgage, the seller agrees to loan you some of his home equity to help you get your down payment money. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Generally, this kind of second mortgage has higher interest.
The satisfaction will be the same, no matter which approach you use to get together your down payment. Your new home will be worth it!
Need to talk about down payment options? Call us: 720-598-8300.