Putting Together Your Down Payment
Many buyers qualify for various loan programs, but they can't afford a large down payment. Do you want to look into getting a new home, but aren't sure how you should put together a down payment?
Tighten your belt and save. Be on the look-out for ways you can reduce your monthly expenditures to save toward a down payment. You could also try enrolling in an automatic savings plan at your bank to have a portion of your pay automatically moved into savings. Some effective ways to save additional funds include moving into housing that is less expensive, and skipping your vacation for a year or two.
Work a second job and sell things you do not need. Look for an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also seriously consider the possessions you actually need and the things you can put up for sale. Multiple small things can add up to a nice sum at a garage or tag sale. You could also research what your investments could bring if sold.
Tap into retirement funds. Explore the specifics of your particular plan. Many people get down payment money from withdrawing funds from their Individual Retirement Accounts or borrowing from their 401(k) programs. Be sure you are knowledgable about any penalties, the way this could affect on taxes, and repayment obligation.
Request a gift from family. First-time buyers somtimes receive help with their down payment assistance from giving parents and other family members who are anxious to help them get into their first home. Your family members may be willing to help you reach the milestone of owning your first home.
Research housing finance agencies. These agencies provide special mortgage programs for low and moderate-income buyers, buyers with an interest in rehabilitating a house within a particular part of the city, and additional groups as defined by the finance agency. With the help of this kind of agency, you can receive a below market interest rate, down payment assistance and other advantages. These kinds of agencies may help you with a lower rate of interest, get you your down payment, and offer other advantages. These non-profit programs were established to build up the value of homes in certain neighborhoods.
Explore no-down and low-down mortgage loans.
- FHA mortgages
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a vital role in aiding low and moderate-income families qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting home financing.
FHA aids first-time buyers and others who may not be able to qualify for a traditional mortgage on their own, by providing mortgage insurance to private lenders.
Interest rates with an FHA mortgage normally feature the market interest rate, but the down payment with an FHA loan will be below those of conventional loans. The down payment may be as low as three percent and the closing costs may be covered by the mortgage loan.
- VA mortgages
VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which usually offers a competitive interest rate, no down payment, and reduced closing costs. Even though the VA does not provide the mortgages, it does certify eligibility to apply for a VA loan.
- Piggy-back loans
You can finance your down payment with a second mortgage that closes with the first. Most of the time, the piggyback loan is for 10 percent of the purchase amount, and the first mortgage covers 80 percent. Instead of the usual 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.
- Carry-Back loans
With a carry-back mortgage, the you borrow part of the seller's home equity.. The buyer funds the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a slightly higher interest rate with the loan financed by the seller.
No matter how you gather 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 payment options? Call us: 866-840-8745 x2.
Looking to Buy?
Are you looking to buy a house? Let us help you. Just fill out as much of the information below that you want and we'll get right back to you, with no obligation to you. We guarantee your privacy.