Building Your Down Payment
Lots of buyers can qualify for various loan programs, but they don't have a lot of money to pay a down payment. Here are a few straightforward ways to put together a down payment
Tighten your belt and save. Scrutinize your budget to discover ways you can cut expenses to save for your down payment. Also, you can look into bank programs through which a portion of your paycheck is automatically placed into savings each pay period. Some practical approaches to put together funds include moving into less expensive housing, and skipping a year's vacation.
Work more and sell things you do not need. Maybe you can get 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. Unworn gold jewelry can bring a good amount from local jewelers. You might have collectibles you can put up for sale on an online auction, or household items for a garage or tag sale. You could also research what any investments you have will bring if sold.
Borrow money from a retirement plan. Check the provisions of your retirement plan. Many people get down payment money from withdrawing from IRAs or borrowing from 401(k) plans. Make sure you are knowledgable about any penalties, the effect this may have on your taxes, and repayment obligation.
Ask for assistance from generous family members. First-time homebuyers somtimes get help with their down payment assistance from thoughtful family members who may be able to help get them in their own home. Your family members may be eager to help you reach the goal of having your first home.
Contact housing finance agencies. Provisional mortgage loans are offered to buyers in certain situations, such as low income purchasers or future homeowners looking to renovating houses in a targeted neighborhood, among others. With the help of this type of agency, you may be given an interest rate that is below market, down payment assistance and other incentives. Housing finance agencies may assist you with a lower interest rate, get you your down payment, and provide other assistance. The main goal of non-profit housing finance agencies is to promote home ownership in specific places.
Research no-down and low-down mortgage loan programs.
- FHA loans
The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low to moderate-income buyers qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to qualify for mortgages.
FHA provides mortgage insurance to private lenders, enabling buyers who will not qualify for a typical mortgage loan, to get a mortgage.
Interest rates with an FHA loan are typically the current interest rate, while the down payment amounts for an FHA loan are less than those of conventional loans. Closing costs can be included in the mortgage, and the down payment can be as low as 3% of the purchase price.
- VA mortgage loans
With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This particular loan requires no down payment, has mimimal closing costs, and offers a competitive rate of interest. Although the mortgage loans are not actually provided by the VA, the department certifies applicants by providing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close with the first. Generally the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. In contrast to the traditional 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.
- Carry-Back loans
With a carry-back mortgage, the you borrow a portion of the seller's home equity.. In this scenario, you would finance the majority of the purchase price with a traditional lender and borrow the remaining amount from the seller. Usually this type of second mortgage will have higher interest.
No matter your method of pulling together down payment money, the thrill of owning your own home will be just as sweet!
Need to talk about down payment options? Give us a call: (904) 342-3622.