Putting Together Your Down Payment
Many folks who would like to buy a new home qualify for a loan, but they don't have much to pay a down payment. We have a few ideas
Slash the budget and build up savings. Look for ways you can reduce your expenditures to put away money for a down payment. You also could enroll in an automatic savings plan at your bank to have a percentage of your pay automatically moved into a savings account. Some effective strategies to save additional funds include moving into less expensive housing, and staying local for your vacation for a year or two.
Work a second job and sell things you don't need. Try to find an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the things you could be able to sell. Maybe you own desirable items you can put up for sale at an online auction, or quality household goods for a garage or tag sale. You could also explore what any investments you hold may bring if sold.
Borrow funds from your retirement plan. Explore the details of your individual plan. You can borrow funds from a 401(k) plan for you down payment or withdraw from an IRA. Be sure you understand the tax ramifications, repayment terms, and penalties for withdrawing early.
Ask for assistance from family members. First-time homebuyers somtimes get help with their down payment assistance from giving parents and other family members who may be eager to help them get into their own home. Your family members may be eager to help you reach the goal of buying your own home.
Research housing finance agencies. These agencies offer provisional loan programs for low and moderate-income buyers, buyers with an interest in renovating a house within a particular part of the city, and additional groups as defined by each finance agency. Financing through this type of agency, you can get a below market interest rate, down payment help and other benefits. These types of agencies can help you with a lower interest rate, get you your down payment, and provide other assistance. These non-profit agencies were established to build up the value of homes in certain places.
Learn about low-down and no-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 a vital part in aiding low and moderate-income Americans get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get mortgage loans.
FHA offers mortgage insurance to private lenders, making the buyers eligible for a loan.
Down payment totals for FHA mortgages are smaller than those with traditional mortgage loans, although these mortgages hold current rates of interest. The required down payment can go as low as 3 percent and the closing costs might be financed in the mortgage loan.
- VA mortgages
With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This specialized loan requires no down payment, has mimimal closing costs, and offers a competitive interest rate. While it's true that the mortgage loans are not actually financed by the VA, the department verfifies applicants by issuing eligibility certificates.
- Piggy-back loans
You can fund a down payment through a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan is for 10 percent of the purchase amount, and the first mortgage finances 80 percent. In contrast to the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.
- Carry-Back loans
With a carry-back mortgage, the seller loans you part of his or her home equity. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Usually this form of second mortgage will have a higher rate of interest.
The satisfaction will be the same, no matter which approach you use to come up with the down payment. Your new home will be well worth it!
Need to talk about your down payment? Give us a call: (401) 583-4150.