Building Your Down Payment
Many borrowers can easily qualify for various loan programs, but they can't afford a large down payment. Below are a few straightforward methods that will help you get together a down payment
Tighten your belt and save. Scrutinize the budget to find ways you can cut expenses to save for your down payment. Also, you can look into bank programs through which a specific portion of your take-home pay is automatically placed into a savings account each pay period. You could look into some big expenses in your budget that you can do without, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or skip a family vacation.
Sell things you do not need and find a second job. Maybe you can find an additional job and build up your earnings. You can also seriously consider the possessions you really need and the items you can put up for sale. A closetful of small items may add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you own.
Borrow from your retirement funds. Explore the specifics of your individual plan. It is possible to borrow funds from a 401(k) plan for a down payment or make a withdrawal from an Individual Retirement Account. Make sure you know about any penalties, the way this could affect on taxes, and repayment obligation.
Ask for help from family members. First-time homebuyers are often lucky enough to get help with their down payment help from giving parents and other family members who may be eager to help them get into their first home. Your family members may be willing to help you reach the milestone of buying your first home.
Learn about housing finance agencies. Provisional mortgate loan programs are extended to buyers in specific circumstances, like low income purchasers or homebuyers planning to improve homes in a certain neighborhood, among others. With the help of this kind of agency, you probably will get an interest rate that is below market, down payment help and other benefits. These kinds of agencies can help you with a reduced rate of interest, get you your down payment, and provide other benefits. The primary goal of non-profit housing finance agencies is to boost home ownership in particular parts of the city.
Learn about low-down and no-down mortgage loans.
- Federal Housing Administration (FHA) loans
The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low to moderate-income individuals qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA offers mortgage insurance to private lenders, enabling new homebuyers who will not be eligible for a conventional mortgage, to get a mortgage.
Down payment sums for FHA loans are less than those of conventional mortgages, although these loans have current interest rates. The down payment can be as low as 3 percent and the closing costs may be financed in the mortgage loan.
- VA mortgages
VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which usually offers a competitive fixed rate of interest, no down payment, and reduced closing costs. Although the mortgage loans don't originate from the VA, the department certifies applicants by issuing eligibility certificates.
- Piggy-back loans
You can finance a down payment using a second mortgage that closes along with the first. In most cases the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. The homebuyer covers the remaining 10%, instead of putting the typical 20% down payment.
- Carry-Back loans
In a "carry back" agreement, the seller commits to lend you part of his home equity to assist you with your down payment funds. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Typically, this form of second mortgage will have higher interest.
No matter how you gather down payment funds, the satisfaction of reaching the goal of owning your own home will be just as sweet!
Need to talk about down payment options? Give us a call at (888) 299-4585.