Your Down Payment
Many folks who would like to purchase a new house qualify for a loan, but they can't afford a large down payment. Here are a few ideas:
Tighten your belt and save. Be on the look-out for ways you can reduce your monthly expenditures to set aside funds for a down payment. You could also try enrolling in an automatic savings plan at your bank to have a portion of your payroll automatically transferred into a savings account. Some effective strategies to build up funds include moving into a residence that is less expensive, and staying local for your family vacation for a year or two.
Work a second job and sell items you don't need. Look for an additional job. This can be rough, but the temporary trial can help you get your down payment. You can also seriously consider the possessions you actually need and the items you could be able to put up for sale. Multiple small items may add up to a nice sum at a garage or tag sale. Also, you can consider selling any investments you own.
Tap into your retirement funds. Investigate the provisions of your retirement program. Some homebuyers get down payment money from withdrawing funds from their Individual Retirement Accounts or borrowing from 401(k) plans. Be sure to find out about the tax consequences, repayment terms, and penalties for withdrawing early.
Ask for help from generous members of your family. First-time homebuyers somtimes receive down payment help from thoughtful 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 buying your first home.
Research housing finance agencies. Special loan programs are given to buyers in certain circumstances, like low income buyers or buyers looking to remodel homes in a targeted area, among others. With the help of this type of agency, you can receive an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies can help you with a lower interest rate, help with your down payment, and provide other assistance. These non-profit agencies to promote community in specific areas.
Research no-down and low-down mortgage loans.
- Federal Housing Administration (FHA) mortgage loans
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low and moderate-income buyers qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA provides mortgage insurance to the private lenders, enabling homebuyers who may not qualify for a traditional mortgage loan, to obtain home financing.
Interest rates for an FHA loan are normally the going interest rate, while the down payment for an FHA loan are lower than those of conventional loans. The down payment may go as low as three percent and the closing costs could be covered by the mortgage loan.
- VA mortgage loans
VA loans are backed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which typically offers a competitive fixed interest rate, no down payment, and limited closing costs. Even though the VA does not actually provide the mortgages, it does issue a certificate of eligibility to qualify for a VA loan.
- Piggy-back loans
You may fund a down payment through a second mortgage that closes along with the first. Generally the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. Rather than the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.
- Carry-Back loans
In the option of a seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. The buyer funds the highest percentage of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually this kind of second mortgage has higher interest.
No matter your method of putting together down payment funds, 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.