Your Down Payment
Lots of borrowers qualify for various loan programs, but they can't afford a large down payment. Want to look into getting a new home, but aren't sure how to get together a down payment?
Slash your budget and build up savings. Scrutinize your budget to discover extra money to save for your down payment. There are bank programs in which some of your take-home pay is automatically transferred into savings every pay period. Some practical strategies to put together funds include moving into less expensive housing, and staying local for your family vacation for a year or two.
Work a second job and sell items you do not need. Look for a second job. This can be rough, but the temporary trial can help you get your down payment. Additionally, you can put together an exhaustive list of items you may be able to sell. Unused gold jewelry can be sold at local jewelers. Multiple small items might add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you own.
Borrow from retirement funds. Explore the details of your particular plan. Many homebuyers get down payment money from withdrawing funds from their IRAs or borrowing from their 401(k) plans. Make sure you are knowledgable about any penalties, the effect this will have on taxes, and repayment terms.
Request a gift from family. First-time buyers somtimes get down payment assistance from gracious family members who may be eager to help get them in their own home. Your family members may be inclined to help you reach the milestone of having your first home.
Research housing finance agencies. Provisional mortgate loan programs are provided to homebuyers in specific situations, like low income homebuyers or people looking to remodel houses 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 assistance and other benefits. These types of agencies may help you with a reduced interest rate, help with your down payment, and offer other assistance. These non-profit agencies exist to promote community in particular neighborhoods.
Research no-down and low-down mortgage loan programs.
- FHA mortgage loans
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in assisting low and moderate-income families get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA aids first-time buyers and others who might not be able to qualify for a traditional mortgage on their own, by offering mortgage insurance to private lenders.
Interest rates for an FHA mortgage are usually the current interest rate, but the down payment with an FHA loan are lower than those of conventional loans. The required down payment can go as low as three percent while the closing costs might be covered by the mortgage.
- VA mortgages
Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan requires no down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. Even though the VA doesn't actually issue the mortgage loans, it does issue a certificate of eligibility to apply for a VA mortgage.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close with the first. Usually the first mortgage is for 80% of the purchase price and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, rather than come up with the typical 20% down payment.
- Carry-Back loans
In a "carry back" mortgage, the seller agrees to lend you part of his home equity to help you get your down payment funds. You would borrow the majority of the purchase price from a traditional lender and borrow the remaining amount from the seller. Often, this kind of second mortgage has a higher rate of interest.
No matter your strategy of pulling together your down payment money, the satisfaction of owning your own home will be just as great!
Need to talk about the best options for down payments? Give us a call at 405-513-7700.