Your Down Payment
Many people who are looking to buy a new home can qualify for various loan programs, but they don't have much to pay a down payment. Do you want to buy a new house, but don't know how to put together your down payment?
Tighten your belt and save. Scrutinize your budget to discover ways you can cut expenses to go toward your down payment. Also, you can look into bank programs through which some of your paycheck is automatically transferred into a savings account each pay period. You might look into some big expenses in your budget that you can give up, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or stay local for your family vacation.
Work a second job and sell items you do not need. Try to find an additional job. This can be exhausting, but the temporary trial can help you get your down payment. Additionally, you can make an exhaustive inventory of items you can sell. Broken gold jewelry can bring a good amount from local jewelry stores. You may have desirable items you can put up for sale at an online auction, or household items for a garage or tag sale. Also, you can look into selling any investments you own.
Tap into your retirement funds. Explore the specifics of your individual plan. It is possible to borrow money from a 401(k) plan for you down payment or get a withdrawal from an IRA. You will want to make sure you know about any penalties, the effect this will have on income taxes, and repayment obligation.
Ask for help from family members. First-time homebuyers somtimes get help with their down payment assistance from gracious parents and other family members who may be willing to help them get into their own home. Your family members may be willing to help you reach the milestone of buying your first home.
Research housing finance agencies. Provisional mortgage programs are provided to homebuyers in certain circumstances, such as low income homebuyers or future homeowners planning to improve houses in a specific area, among others. Financing with a housing finance agency, you can receive an interest rate that is below market, down payment help and other perks. These kinds of agencies can assist you with a reduced rate of interest, help with your down payment, and provide other assistance. These non-profit agencies were established to promote home ownership in specific places.
Find out about low-down and no-down mortgage loans.
- FHA mortgages
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in aiding low and moderate-income Americans qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in qualifying for mortgage loans.
FHA aids first-time homebuyers and others who would not be eligible for a traditional loan by themselves, by offering mortgage insurance to the lenders.
Down payment sums for FHA loans are smaller than those for traditional mortgage loans, even though these mortgages have average interest rates. Closing costs can be covered by the mortgage, and the down payment may be as low as 3 percent of the total amount.
- VA loans
With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This specialized loan requires no down payment, has mimimal closing costs, and offers a competitive interest rate. Although the VA does not issue the mortgages, it does issue a certificate of eligibility to qualify for a VA mortgage.
- Piggy-back loans
You may finance your down payment with a second mortgage that closes with the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.
- Carry-Back loans
In a "carry back" situation, the seller agrees to loan you some of his home equity to assist you with your down payment funds. The buyer finances the highest percentage of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Typically you'll pay a somewhat higher interest rate on the loan financed by the seller.
The feeling of accomplishment will be the same, no matter which strategy you use to put together your down payment. Your new home will be well worth it!
Want to discuss your down payment? Call us at (904) 342-3622.