Your Down Payment
Lots of borrowers qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to look into getting a new home, but don't know how you should put together your down payment?
Slash your budget and build up savings. Scrutinize the budget to discover extra money to save for your down payment. You also could enroll in an automatic savings plan to have a percentage of your pay automatically moved into savings. You would be wise to look into some big expenses in your budget that you can do without, or reduce, at least temporarily. For example, you may move into less expensive housing, or skip a vacation.
Work more and sell things you do not need. Try to get an additional job. This can be rough, but the temporary trial can provide your down payment money. You can also get creative about the items you could be able to sell. Multiple small items could add up to a fair amount at a garage or tag sale. Also, you might want to look into selling any investments you hold.
Borrow money from a retirement plan. Research the specifics of your particular plan. You can borrow funds from a 401(k) plan for you down payment or get a withdrawal from an Individual Retirement Account. Make sure you are clear about any penalties, the effect this will have on your taxes, and repayment terms.
Request a gift from family. First-time buyers somtimes receive down payment assistance from caring parents and other family members who may be eager to help get them in their first home. Your family members may be pleased to help you reach the goal of having your first home.
Contact housing finance agencies. Special loan programs are extended to homebuyers in certain situations, such as low income buyers or people looking to remodel homes in a particular neighborhood, among others. With the help of this type of agency, you may receive an interest rate that is below market, down payment assistance and other incentives. These kinds of agencies can help you with a lower rate of interest, get you your down payment, and provide other benefits. These non-profit agencies to build up community in specific neighborhoods.
Learn about low-down and no-down mortgages.
- FHA mortgage loans
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in assisting low and moderate-income buyers get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA assists first-time homebuyers and others who may not be able to qualify for a traditional mortgage on their own, by providing mortgage insurance to private lenders.
Down payment requirements for FHA loans are below those for traditional mortgages, although these mortgages hold average rates of interest. Closing costs can be included in the mortgage, while your down payment might be as low as 3 percent of the total.
- VA loans
VA loans are backed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which typically offers a reasonable rate of interest, no down payment, and limited closing costs. While the loans aren't actually issued by the VA, the department certifies borrowers by providing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close along with the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. In contrast to the usual 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.
- Carry-Back loans
We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. The buyer funds most of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Generally, this type of second mortgage will have a higher rate of interest.
No matter how you gather your down payment money, the satisfaction of reaching the goal of living in your own home will be just as great!
Want to discuss the best options for down payments? Give us a call: (334) 285-8850.