Your Down Payment
Lots of borrowers can easily qualify for various loan programs, but they can't afford a large down payment. Do you want to buy a new home, but aren't sure how to put together your down payment?
Tighten your belt and save. Look for ways to reduce your monthly expenditures to put away money for a down payment. Also, you can look into bank programs in which a portion of your take-home pay is automatically deposited into savings each pay period. Some effective strategies to put together funds include moving into a residence that is less expensive, and skipping your family vacation for a year or two.
Sell items you do not need and find a second job. Perhaps you can get a second job and build up your earnings. Additionally, you can put together an exhaustive list of items you can sell. Unused gold jewelry can bring a good price from local jewelers. Maybe you own desirable items you can sell at an online auction, or quality household items for a garage or tag sale. You could also explore what your investments will sell for.
Tap into your retirement funds. Explore the specifics of your particular plan. Some homebuyers get down payment money by withdrawing what they need from their Individual Retirement Accounts or getting money out of 401(k) programs. Be sure you understand the tax consequences, your obligation for repaying the money, and penalties for withdrawing early.
Request a generous gift from family. First-time buyers somtimes receive help with their down payment help from gracious family members who are prepared to help them get into their own home. Your family members may be eager to help you reach the milestone of owning your own home.
Learn about housing finance agencies. Special loan programs are provided to homebuyers in certain situations, such as low income buyers or future homeowners looking to renovating homes in a certain part of town, among others. With the help of this kind of agency, you probably will get a below market interest rate, down payment help and other incentives. Housing finance agencies may assist eligible buyers with a lower rate of interest, get you your down payment, and offer other assistance. These non-profit agencies exist to promote home ownership in specific neighborhoods.
Find out about low-down and no-down mortgage loan programs.
- FHA mortgages
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low to moderate-income Americans get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages.
FHA offers mortgage insurance to private lenders, enabling homebuyers who will not be eligible for a traditional mortgage, to obtain a mortgage.
Interest rates with an FHA loan are normally the current interest rate, but the down payment requirements for an FHA loan will be lower than those of conventional loans. Closing costs can be included in the mortgage, and the down payment could be as low as 3 percent of the total.
- VA mortgages
VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which generally offers a competitive fixed rate of interest, no down payment, and reduced closing costs. Even though the loans are not actually provided by the VA, the department certifies borrowers by issuing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes along with the first. Most of the time, the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. Rather than the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
In the option of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Generally, this type of second mortgage has higher interest.
The feeling of accomplishment will be the same, no matter how you manage to get together the down payment. Your brand new home will be well worth it!
Want to discuss the best options for down payments? Give us a call: (760) 228-2262.