Putting Together Your Down Payment
Lots of buyers qualify for several different kinds of mortgages, but they can't afford a large down payment. We have a few ideas
Slash your budget and build up savings. Scrutinize the budget to uncover ways you can cut expenses to save for your down payment. There are bank programs through which a specific portion of your take-home pay is automatically placed into savings each pay period. You would be wise to look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay close to home for your annual vacation.
Work a second job and sell things you do not need. Try to find a second job. This can be rough, but the temporary trial can help you get your down payment. You can also get creative about the items you can put up for sale. Maybe you have desirable items you can put up for sale at an auction website, or quality household items for a garage or tag sale. You could also explore what your investments will sell for.
Borrow funds from your retirement plan. Research the details of your particular plan. It is possible to take out funds from a 401(k) plan for you down payment or make a withdrawal from an Individual Retirement Account. You will want to ensure you know about any penalties, the way this could affect on your income taxes, and repayment terms.
Ask for help from family members. First-time buyers somtimes receive help with their down payment help from gracious family members who may be prepared to help them get into their first home. Your family members may be eager to help you reach the goal of buying your own home.
Contact housing finance agencies. Provisional mortgate loan programs are offered to homebuyers in specific situations, like low income buyers or future homeowners looking to improve houses in a targeted part of town, among others. With the help of this type of agency, you can get a below market interest rate, down payment assistance and other advantages. Housing finance agencies may help you with a lower interest rate, get you your down payment, and offer other advantages. The primary mission of not-for-profit housing finance agencies is to promote the purchase of homes in certain places.
Research no-down and low-down mortgages.
- FHA mortgages
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in assisting low and moderate-income Americans qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting mortgages.
FHA assists first-time buyers and others who would not be eligible for a typical loan on their own, by providing mortgage insurance to the private lenders.
Down payment totals for FHA mortgages are less than those with typical mortgages, even though these mortgages come with current interest rates. The down payment can be as low as three percent and the closing costs may be covered by the mortgage.
- VA loans
Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This particular loan does not require a down payment, has mimimal closing costs, and offers a competitive interest rate. Even though the VA doesn't actually issue the mortgage loans, it does certify eligibility to apply for a VA mortgage.
- Piggy-back loans
You may finance a down payment with a second mortgage that closes at the same time as the first. Most of the time, the first mortgage covers 80% of the purchase price and the "piggyback" is for 10%. The borrower covers the remaining 10%, rather than come up with the usual 20% down payment.
- Carry-Back loans
We a seller carries back a second mortgage, the seller loans you part of his or her equity. The buyer finances most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a somewhat higher rate on the loan from the seller.
No matter your strategy of getting together your down payment money, the thrill of reaching the goal of living in your own home will be just as great!
Need to talk about down payments? Call us: (303) 228-2254.