Putting Together Your Down Payment
Lots of buyers qualify for various loan programs, but they don't have much to put up the standard down payment. We have a few suggestions
Slash the budget and build up savings. Turn your budget upside-down to discover ways you can cut expenses to save for your down payment. There are bank programs in which a portion of your take-home pay is automatically deposited into savings every pay period. You might look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay local for your vacation.
Sell items you don't need and get a part-time job. Try to get a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. Additionally, you can make an exhaustive list of things you may be able to sell. Unused gold jewelry can bring a good amount from local jewelry stores. Multiple small things might add up to a nice sum at a garage or tag sale. Also, you might want to consider selling any investments you hold.
Borrow funds from a retirement plan. Investigate the parameters of your specific plan. You can borrow funds from a 401(k) plan for a down payment or withdraw from an IRA. Make sure you are clear about any penalties, the way this will affect on your income taxes, and repayment terms.
Ask for a gift from family. First-time buyers somtimes receive help with their down payment assistance from gracious parents and other family members who may be willing to help get them in their first home. Your family members may be willing to help you reach the milestone of having your own home.
Learn about housing finance agencies. Provisional mortgage programs are provided to buyers in specific circumstances, such as low income buyers or people looking to improve homes in a specific area, among others. With the help of a housing finance agency, you may get an interest rate that is below market, down payment help and other advantages. These types of agencies can help eligible buyers with a lower interest rate, get you your down payment, and provide other assistance. These non-profit agencies to boost home ownership in particular places.
Explore no-down and low-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 an important role in aiding low to moderate-income buyers qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to get mortgage loans.
FHA offers mortgage insurance to private lenders, enabling new homebuyers who will not be eligible for a conventional mortgage, to get a mortgage.
Interest rates for an FHA mortgage are normally the current interest rate, while the down payment amounts with an FHA loan are less than those of conventional loans. Closing costs might be included in the mortgage, and the down payment may be as low as 3% of the total.
- VA mortgages
VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans are eligible for a VA loan, which usually offers a reasonable rate of interest, no down payment, and reduced closing costs. While the loans don't originate from the VA, the department certifies borrowers by issuing eligibility certificates.
- Piggy-back loans
You may fund a down payment with a second mortgage that closes with the first. Often the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, instead of putting the typical 20% down payment.
- Carry-Back loans
With a carry-back mortgage, the seller loans you part of his or her home equity. The buyer finances the majority of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Typically you'll pay a slightly higher rate on the loan financed by the seller.
No matter your strategy of pulling together your down payment, the thrill of reaching the goal of owning your own home will be just as sweet!
Need to talk about your down payment? Give us a call at 504-866-5626.