Your Down Payment
Lots of borrowers can easily qualify for several different kinds of mortgages, but they don't have a lot of cash to put up a down payment. Here are a few straightforward ways to put together a down payment
Tighten your belt and save. Look for ways you can trim your monthly expenditures to set aside funds for a down payment. You could also try enrolling in an automatic savings plan at your bank to have a percentage of your pay automatically transferred into your savings account. You might look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or stay close to home for your annual vacation.
Sell things you do not really need and find a part-time job. Try to find an additional job. This can be rough, but the temporary difficulty can provide your down payment money. You can also get creative about the items you migh be able to put up for sale. You may have desirable items you can sell on an auction website, or household goods for a garage or tag sale. You can also research what your investments may sell for.
Tap into retirement funds. Investigate the provisions of your particular program. It is possible to borrow funds from a 401(k) plan for you down payment or withdraw from an IRA. Make sure you understand the tax ramifications, your obligation for repaying the money, and any penalties for withdrawing early.
Ask for a generous gift from your family. First-time buyers are sometimes lucky enough to get down payment help from thoughtful parents and other family members who are able to help them get into 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 loans are given to buyers in specific situations, like low income homebuyers or people looking to remodel homes in a particular area, among others. With the help of this type of agency, you may be given a below market interest rate, down payment help and other perks. Housing finance agencies may assist eligible buyers with a reduced rate of interest, help with your down payment, and offer other benefits. The primary purpose of non-profit housing finance agencies is boosting the purchase of homes in specific areas.
Find out about low-down and no-down mortgage loan programs.
- FHA mortgage loans
The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in assisting low and moderate-income buyers qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get home financing.
FHA offers mortgage insurance to private lenders, enabling buyers who might not qualify for a traditional loan, to get a mortgage.
Interest rates for an FHA loan are typically the market interest rate, but the down payment requirements for an FHA loan will be lower than those of conventional loans. The required down payment may be as low as 3 percent while the closing costs can be covered by the mortgage.
- VA loans
With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This particular loan does not require a down payment, has reduced closing costs, and offers a competitive interest rate. While the VA does not issue the mortgages, it does certify eligibility to qualify for a VA mortgage.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes at the same time as the first. Usually the piggyback loan takes care of 10 percent of the home's price, while the first mortgage covers 80 percent. The borrower covers the remaining 10%, instead of needing to pull together the typical 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. In this scenario, you would borrow the largest portion of the purchase price from a traditional mortgage lending institution and borrow the remainder from the seller. Typically you will pay a slightly higher rate on the loan from the seller.
The feeling of accomplishment will be the same, no matter how you manage to come up with the down payment. Your new home will be your reward!
Need to talk about down payments? Give us a call: 405-513-7700.