Your Down Payment
Many borrowers can qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to buy a new home, but don't know how to get together a down payment?
Cut expenses and save. Scrutinize the budget to discover ways you can cut expenses to save for your down payment. Also, you can look into bank programs in which a portion of your paycheck is automatically transferred into a savings account every pay period. You could look into some big expenses in your spending history that you can give up, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or skip a vacation.
Sell items you do not really need and get a second job. Maybe you can find an additional job and save your earnings. In addition, you can put together a comprehensive inventory of items you can sell. Unworn gold jewelry can bring a good amount from local jewelry stores. Multiple small items can add up to a fair amount at a garage or tag sale. You can also explore what your investments may sell for.
Tap into your retirement funds. Explore the specifics for your individual plan. Many people get down payment money by withdrawing what they need from Individual Retirement Accounts or borrowing from 401(k) programs. Be sure to ask your plan representative about the tax consequences, repayment terms, and any penalties for withdrawing early.
Request a gift from your family. First-time buyers somtimes receive down payment assistance from giving family members who are willing to help get them in their own home. Your family members may be inclined to help you reach the goal of having your first home.
Learn about housing finance agencies. These agencies provide provisional mortgate loan programs to moderate and low income homebuyers, buyers with an interest in sprucing up a home in a targeted area, and other groups as defined by the finance agency. Financing with a housing finance agency, you may be given an interest rate that is below market, down payment help and other benefits. These types of agencies can assist eligible homebuyers with a lower interest rate, get you your down payment, and offer other benefits. These non-profit agencies exist to boost community in particular neighborhoods.
Research no-down and low-down mortgage loans.
- Federal Housing Administration (FHA) mortgages
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low to moderate-income families get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who need to qualify for mortgages.
FHA offers mortgage insurance to the private lenders, enabling new homebuyers who will not be eligible for a conventional mortgage, to get a mortgage.
Down payment totals for FHA mortgages are lower than those for typical mortgage loans, although these loans hold current rates of interest. The required down payment can be as low as three percent while the closing costs might be packaged in the mortgage.
- VA loans
With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This particular loan requires no down payment, has limited closing costs, and provides the benefit of a competitive interest rate. Although the loans don't originate from the VA, the office verfifies applicants by issuing eligibility certificates.
- Piggy-back loans
You can fund your down payment through a second mortgage that closes along with the first. Most of the time, the first mortgage is for 80% of the purchase price and the "piggyback" funds 10%. In contrast to the traditional 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
In a "carry back" agreement, the seller agrees to lend you a portion of his own equity to help you get your down payment money. The buyer finances the majority of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Often, this kind of second mortgage will have a higher rate of interest.
No matter how you gather your down payment, the thrill of reaching the goal of living in your own home will be just as great!
Need to talk about your down payment? Give us a call: 504-866-5626.