Putting Together Your Down Payment
Lots of folks who would like to buy a new house qualify for a loan, but they can't afford a large down payment. Below are a few methods that will help you get together a down payment
Cut expenses and save. Scrutinize the budget to uncover ways you can cut expenses to go toward your down payment. There are bank programs through which a specific portion of your take-home pay is automatically transferred into a savings account each pay period. You would be wise to look into some big expenses in your budget 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 vacation.
Sell items you don't really need and get a second job. Try to get a second job. This can be rough, but the temporary trial can provide your down payment money. Additionally, you can make an exhaustive inventory of things you may be able to sell. Broken gold jewelry can bring a good price from local jewelers. Maybe you own desirable items you can sell on an online auction, or quality household goods for a garage or tag sale. You could also explore what your investments could sell for.
Tap into your retirement funds. Research the details for your particular plan. You can take out money from a 401(k) plan for a down payment or withdraw from an IRA. You will need to ensure you understand about any penalties, the effect this could have on your taxes, and repayment terms.
Ask for help from members of your family. First-time homebuyers somtimes receive help with their down payment assistance from giving parents and other family members who may be anxious to help them get into their first home. Your family members may be inclined to help you reach the milestone of having your first home.
Contact housing finance agencies. These agencies extend provisional mortgage programs to low and moderate-income borrowers, buyers interested in renovating a residence within a particular area, and additional specific kinds of buyers as defined by each finance agency. Financing with this type of agency, you probably will get an interest rate that is below market, down payment assistance and other incentives. Housing finance agencies may assist eligible buyers with a reduced interest rate, get you your down payment, and provide other advantages. These non-profit programs exist to boost the value of homes in certain places.
Explore no-down and low-down mortgages.
- FHA loans
The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low to moderate-income individuals get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA provides mortgage insurance to private lenders, ensuring the buyers are eligible for a mortgage loan.
Down payment amounts for FHA loans are less than those with conventional mortgages, even though these mortgages have current interest rates. The down payment may go as low as 3 percent while the closing costs might be covered by the mortgage loan.
- VA mortgages
VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a competitive fixed interest rate, no down payment, and minimal closing costs. Although the VA doesn't actually issue the loans, it does certify eligibility to qualify for a VA loan.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close at the same time as the first. Often the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, instead of putting the usual 20% down payment.
- Carry-Back loans
In a "carry back" mortgage, the seller agrees to lend you part of his own equity to help you with your down payment funds. The buyer funds most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Typically you'll pay a somewhat higher rate on the loan from the seller.
No matter your method of getting together your down payment, the thrill of reaching the goal of owning your own home will be just as great!
Want to discuss down payments? Call us at (321) 777-7277.