Building Your Down Payment
Many buyers qualify for a mortgage loan, but they can't afford a large down payment. Here are a few ways to put together a down payment
Cut expenses and save. Scrutinize your budget to discover extra money to go toward your down payment. Also, you can look into bank programs through which a portion of your take-home pay is automatically deposited into savings every pay period. Some practical approaches to save additional funds include moving into less expensive housing, and skipping your vacation for a year or two.
Sell items you do not really need and get a part-time job. Try to find an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. In addition, you can make a comprehensive list of things you may be able to sell. Unworn gold jewelry can be sold at local jewelers. You might own collectibles you can put up for sale on an auction website, or quality household goods for a tag or garage sale. You might also explore what any investments you own may sell for.
Borrow money from your retirement plan. Explore the specifics for your particular plan. You can borrow money from a 401(k) for you down payment or withdraw from an IRA. Make sure to learn about the tax consequences, your obligation for repayment, and possible penalties for withdrawing early.
Ask for assistance from generous members of your family. Many homebuyers somtimes receive down payment help from thoughtful parents and other family members who may be prepared to help them get into their own home. Your family members may be happy at the chance to help you reach the goal of owning your first home.
Learn about housing finance agencies. Provisional mortgate loan programs are extended to homebuyers in certain situations, like low income homebuyers or homebuyers planning to improve homes in a certain neighborhood, among others. Working through this kind of agency, you probably will get an interest rate that is below market, down payment help and other perks. These kinds of agencies can help eligible buyers with a reduced rate of interest, help with your down payment, and provide other benefits. These non-profit programs were established to promote community in particular areas.
Find out about low-down and no-down mortgages.
- Federal Housing Administration (FHA) loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income families qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers who wish to get mortgage loans.
FHA aids first-time homebuyers and others who may not be eligible for a conventional mortgage loan by themselves, by offering mortgage insurance to private lenders.
Interest rates for an FHA mortgage are normally the current interest rate, but the down payment with an FHA mortgage are below those of conventional loans. The required down payment can be as low as 3 percent and the closing costs may be financed in the mortgage.
- VA loans
With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This special loan requires no down payment, has reduced closing costs, and offers a competitive rate of interest. Even though the VA does not issue the mortgage loans, it does certify eligibility to qualify for a VA loan.
- Piggy-back loans
You can finance a down payment through a second mortgage that closes along with the first. Usually the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. The borrower covers the remaining 10%, rather than come up with the usual 20% down payment.
- Carry-Back loans
We a seller carries back a second mortgage, the you borrow a portion of the seller's home equity.. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and borrows the remainder from the seller. Usually this type of second mortgage has a higher rate of interest.
The satisfaction will be the same, no matter which method you use to come up with the down payment. Your brand new home will be well worth it!
Want to discuss down payment options? Give us a call: 504-866-5626.
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