Your Down Payment
Lots of borrowers qualify for a loan, but they can't afford a large down payment. Here are a few ways to get together a down payment
Tighten your belt and save. Be on the look-out for ways to trim your monthly expenses to set aside money for a down payment. You might also try enrolling in an automatic savings plan at your bank to have a portion of your pay automatically moved into savings. Some effective approaches to save additional funds include moving into housing that is less expensive, and staying home for your vacation for a year or two.
Sell items you don't really need and find a part-time job. Try to get an additional job. This can be rough, but the temporary difficulty can provide your down payment money. In addition, you can make a comprehensive inventory of things you can sell. Unused gold jewelry can bring a good price from local jewelers. A closetful of small things can add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you own.
Borrow from a retirement plan. Research the specifics for your individual plan. Some people get down payment money by withdrawing what they need from IRAs or taking money out of 401(k) plans. Be sure you understand the tax consequences, your obligation for repaying the money, and penalties for withdrawing early.
Ask for assistance from generous members of your family. First-time buyers somtimes get help with their down payment help from thoughtful family members who may be willing to help get them in their first home. Your family members may be inclined to help you reach the goal of owning your own home.
Research housing finance agencies. These types of agencies offer provisional mortgate loan programs- for low and moderate-income homebuyers, buyers interested in remodeling a house within a particular part of the city, and additional certain types of buyers as specified by the agency. With the help of this kind of agency, you may receive a below market interest rate, down payment help and other advantages. These kinds of agencies may assist you with a reduced interest rate, get you your down payment, and offer other assistance. These non-profit programs were established to boost the value of homes in certain places.
Learn about low-down and no-down mortgage loans.
- 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 to moderate-income individuals qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgage loans.
FHA offers mortgage insurance to private lenders, making the buyers eligible for a mortgage.
Interest rates for an FHA mortgage are typically the current interest rate, while the down payment requirements for an FHA mortgage will be less than those of conventional loans. The required down payment may go as low as three percent while the closing costs could be financed in the mortgage loan.
- VA mortgage loans
Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This special loan requires no down payment, has reduced closing costs, and provides a competitive rate of interest. Although the VA does not actually finance the mortgage loans, it does certify eligibility to apply for a VA loan.
- Piggy-back loans
You may finance your down payment using a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage finances 80 percent. The borrower pays the remaining 10%, instead of putting the usual 20% down payment.
- Carry-Back loans
In a "carry back" situation, the seller agrees to loan you a portion of his home equity to help you with your down payment funds. You would finance the majority of the purchase price with a traditional mortgage lending institution and finance the remaining amount with the seller. Typically you will pay a slightly higher interest rate with the loan from the seller.
No matter your strategy of pulling together down payment money, the satisfaction of owning your own home will be just as great!
Want to discuss the best options for down payments? Call us at 866-840-8745 x2.
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