Your Down Payment
Many borrowers can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Here's where you start
Tighten your belt and save. Look for ways you can trim your monthly expenditures to set aside funds for a down payment. You could also try enrolling in an automatic savings plan to have a percentage of your pay automatically transferred into savings. You would be wise to look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you may move into less expensive housing, or skip a family vacation.
Sell items you don't really need and find a part-time job. Try to find an additional job. This can be rough, but the temporary trial can provide your down payment money. You can also get serious about the possessions you really need and the items you can sell. Maybe you own collectibles you can put up for sale on an online auction, or quality household goods for a tag or garage sale. Also, you might want to think about selling any investments you hold.
Borrow funds from your retirement plan. Check the provisions of your specific program. Many people get down payment money from withdrawing what they need from their IRAs or borrowing from 401(k) plans. Be sure you are knowledgable about any penalties, the way this could affect on your taxes, and repayment obligation.
Request a generous gift from your family. First-time buyers somtimes receive down payment assistance from gracious parents and other family members who are eager to help them get into their first home. Your family members may be inclined to help you reach the milestone of owning your first home.
Research housing finance agencies. These agencies provide provisional loan programs for moderate and low income buyers, buyers with an interest in renovating a house in a targeted part of the city, and additional certain kinds of buyers as specified by the finance agency. With the help of this type of agency, you probably will be given a below market interest rate, down payment help and other advantages. Housing finance agencies may help eligible homebuyers with a reduced rate of interest, get you your down payment, and provide other benefits. The principal goal of not-for-profit housing finance agencies is promoting the purchase of homes in particular areas.
Explore no-down and low-down mortgage loans.
- FHA mortgages
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income buyers qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to get home financing.
FHA helps first-time homebuyers and others who would not be eligible for a typical loan on their own, by offering mortgage insurance to lenders.
Interest rates for an FHA mortgage are generally the market interest rate, but the down payment amounts for an FHA mortgage are below those of conventional loans. Closing costs might be financed in the mortgage, while your down payment may be as low as 3% of the total amount.
- VA mortgages
With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This specialized loan does not require a down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. Even though the VA doesn't provide the mortgage loans, it does certify eligibility to apply for a VA mortgage.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes at the same time as the first. Usually the piggyback loan is for 10 percent of the purchase price, and the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
We a seller carries back a second mortgage, the seller loans you part of his or her equity. In this scenario, you would finance the majority of the purchase price with a traditional lending institution and finance the remaining amount with the seller. Typically you will pay a somewhat higher interest rate with the loan financed by the seller.
The satisfaction will be the same, no matter how you manage to come up with your down payment. Your new home will be your reward!
Want to discuss down payments? Give us a call: 2037296681.