Your Down Payment
Lots of buyers qualify for various loan programs, but they can't afford a large down payment. Here are a few ideas:
Tighten your belt and save. Be on the look-out for ways to reduce your monthly expenditures to put away money for a down payment. Also, you can look into bank programs through which a specific portion of your take-home pay is automatically transferred into a savings account every pay period. Some practical strategies to build up funds include moving into housing that is less expensive, and skipping a year's vacation.
Work more and sell things you do not need. Maybe you can get a second job to get your down payment money. In addition, you can make an exhaustive list of things you can sell. Broken gold jewelry can be sold at local jewelers. Multiple small items may add up to a nice sum at a garage or tag sale. You can also explore what any investments you own will bring if sold.
Borrow from your retirement funds. Check the provisions of your particular plan. You may borrow funds from a 401(k) for a down payment or get a withdrawal from an Individual Retirement Account. Be sure you understand about any penalties, the effect this will have on taxes, and repayment terms.
Ask for assistance from generous members of your family. First-time homebuyers somtimes get down payment help from gracious parents and other family members who may be eager to help get them in their own home. Your family members may be eager to help you reach the milestone of buying your own home.
Contact housing finance agencies. Special mortgage programs are extended to homebuyers in certain circumstances, such as low income homebuyers or buyers looking to remodel houses in a particular area, among others. With the help of a housing finance agency, you probably will receive an interest rate that is below market, down payment assistance and other perks. Housing finance agencies may help you with a lower interest rate, get you your down payment, and provide other advantages. These non-profit agencies to build up community in specific places.
Find out about low-down and no-down mortgages.
- FHA mortgages
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a critical part in aiding low and moderate-income buyers get mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgage loans.
FHA helps first-time buyers and others who may not be able to qualify for a traditional mortgage by themselves, by offering mortgage insurance to the private lenders.
Down payment amounts for FHA mortgages are less than those with traditional mortgage loans, even though these loans hold average interest rates. Closing costs can be covered by the mortgage, and the down payment can be as low as 3% of the purchase price.
- VA loans
With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This special loan does not require a down payment, has mimimal closing costs, and offers a competitive rate of interest. Even though the VA doesn't provide the mortgages, it does issue a certificate of eligibility to apply for a VA loan.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close with the first. Generally the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, rather than needing to pull together the usual 20% down payment.
- Carry-Back loans
We a seller carries back a second mortgage, the seller loans you part of his or her home equity. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Usually you will pay a slightly higher rate with the loan financed by the seller.
No matter your strategy of putting together your down payment, the satisfaction of living in your own home will be just as sweet!
Want to discuss down payments? Give us a call at 405-513-7700.