Your Down Payment
Lots of borrowers can qualify for various loan programs, but they can't afford a large down payment. Here are a few straightforward methods that will help you put together a down payment
Cut expenses and save. Scrutinize the budget to find ways you can cut expenses to save for your down payment. You may also decide to enroll in an automatic savings plan to automatically have a predetermined amount from your take-home pay moved into savings. You could look into some big expenses in your budget that you can live without, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or skip a family vacation.
Work a second job and sell items you do not need. Try to find an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get creative about the things you migh be able to sell. Maybe you have collectibles you can put up for sale on an online auction, or household goods for a tag or garage sale. Also, you can look into selling any investments you own.
Borrow funds from your retirement plan. Check the parameters of your specific program. Many people get down payment money from withdrawing from their IRAs or borrowing from their 401(k) programs. Be sure to learn about the tax consequences, repayment terms, and any early withdrawal penalties.
Ask for a generous gift from your family. Many homebuyers somtimes get down payment assistance from gracious family members who are able to help them get into their first home. Your family members may be eager to help you reach the milestone of having your own home.
Learn about housing finance agencies. Provisional mortgage programs are given to homebuyers in certain circumstances, like low income purchasers or homebuyers planning to renovating homes in a particular neighborhood, among others. With the help of a housing finance agency, you can get a below market interest rate, down payment help and other benefits. Housing finance agencies may help eligible buyers with a reduced interest rate, help with your down payment, and provide other benefits. These non-profit agencies to promote home ownership in specific places.
Explore no-down and low-down mortgage loan programs.
- FHA loans
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income families qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA aids first-time homebuyers and others who might not be eligible for a conventional mortgage loan by themselves, by offering mortgage insurance to the lenders.
Interest rates for an FHA mortgage are typically the market interest rate, but the down payment amounts with an FHA mortgage will be below those of conventional loans. The down payment may go as low as 3 percent and the closing costs might be financed in the mortgage loan.
- VA mortgage loans
Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This particular loan requires no down payment, has limited closing costs, and offers a competitive interest rate. While the mortgage loans are not actually provided by the VA, the department verfifies applicants by providing eligibility certificates.
- Piggy-back loans
You may finance your down payment with a second mortgage that closes with the first. Most of the time, the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, rather than putting the typical 20% down payment.
- Carry-Back loans
In a "carry back" mortgage, the seller commits to lend you part of his own equity to help you with your down payment funds. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lending institution and finance the remainder with the seller. Typically you'll pay a slightly higher rate with the loan from the seller.
No matter how you gather your down payment, the satisfaction of owning your own home will be just as sweet!
Need to talk about down payment options? Give us a call: 405-513-7700.