Building Your Down Payment
Many borrowers can qualify for a mortgage loan, but they can't afford a large down payment. Do you want to look into getting a new house, but aren't sure how to get together your down payment?
Reduce expenses and save. Scrutinize the budget to find ways you can cut expenses to save for your down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a specific portion of your paycheck moved into savings. Some practical methods to save additional funds include moving into a residence that is less expensive, and skipping a year's vacation.
Sell things you do not need and find a second job. Perhaps you can find a second job to get your down payment money. Additionally, you can put together an exhaustive inventory of things you may be able to sell. Broken gold jewelry can bring a good price from local jewelers. Multiple small things might add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you own.
Borrow from retirement funds. Investigate the provisions of your retirement program. Many people get down payment money from withdrawing what they need from their Individual Retirement Accounts or borrowing from 401(k) programs. Be sure to learn about the tax consequences, your obligation for repaying funds, and penalties for withdrawing early.
Ask for a gift from your family. First-time homebuyers somtimes get help with their down payment help from thoughtful parents and other family members who may be prepared to help them get into their first home. Your family members may be willing to help you reach the milestone of having your first home.
Learn about housing finance agencies. These types of agencies provide provisional mortgage loans for moderate and low income borrowers, buyers with an interest in remodeling a home within a particular part of the city, and additional certain kinds of buyers as defined by each finance agency. Working through this kind of agency, you may receive an interest rate that is below market, down payment assistance and other benefits. These kinds of agencies may assist you with a lower rate of interest, help with your down payment, and offer other advantages. The central mission of not-for-profit housing finance agencies is build up the purchase of homes in particular parts of the city.
Research no-down and low-down mortgages.
- Federal Housing Administration (FHA) mortgage loans
The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in helping low and moderate-income Americans qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA helps first-time homebuyers and others who would not be eligible for a typical loan by themselves, by offering mortgage insurance to private lenders.
Interest rates for an FHA loan are typically the current interest rate, but the down payment amounts with an FHA mortgage will be less than those of conventional loans. Closing costs may be included in the mortgage, while the down payment might be as low as 3% of the total.
- VA mortgage loans
Guaranteed by the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This special loan requires no down payment, has mimimal closing costs, and provides the benefit of a competitive interest rate. Although the mortgage loans aren't actually issued by the VA, the department certifies borrowers by issuing eligibility certificates.
- Piggy-back loans
You may fund your down payment using a second mortgage that closes along with the first. Generally the piggyback loan is for 10 percent of the home's price, and the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, rather than putting the typical 20% down payment.
- Carry-Back loans
In a "carry back" situation, the seller commits to loan you a portion of his own equity to help you with your down payment money. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Usually this kind of second mortgage will have a higher rate of interest.
The satisfaction will be the same, no matter how you manage to get together your down payment. Your brand new home will be worth it!
Want to discuss down payment options? Call us at (904) 342-3622.