Putting Together Your Down Payment
Many borrowers can easily qualify for several different kinds of mortgages, but they don't have a large sum of cash to put up the standard down payment. Below are a few ways to put together a down payment
Slash your budget and build up savings. Turn your budget upside-down to uncover extra money to save for your down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a specific portion of your paycheck moved into a savings account. You could look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or stay close to home for your annual vacation.
Work more and sell things you do not need. Perhaps you can find an additional job to get your down payment money. You can also get creative about the things you can sell. Maybe you have collectibles you can put up for sale on an online auction, or household items for a garage or tag sale. Also, you can look into selling any investments you hold.
Borrow from a retirement plan. Check the provisions of your particular program. You can take out funds from a 401(k) plan for you down payment or get a withdrawal from an Individual Retirement Account. Be sure you comprehend the tax consequences, repayment terms, and any early withdrawal penalties.
Ask for assistance from family members. First-time buyers are often lucky enough to receive help with their down payment help from giving family members who are anxious to help get them in their own home. Your family members may be inclined to help you reach the milestone of having your own home.
Contact housing finance agencies. These agencies offer special mortgage programs for moderate and low income borrowers, buyers interested in remodeling a residence within a specific area, and additional groups as defined by each agency. Working through a housing finance agency, you probably will be given an interest rate that is below market, down payment assistance and other incentives. These kinds of agencies can assist you with a lower rate of interest, help with your down payment, and offer other advantages. These non-profit agencies to build up home ownership in certain areas.
Research no-down and low-down mortgages.
- FHA mortgage loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in helping low to moderate-income Americans get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in qualifying for mortgage loans.
FHA assists first-time buyers and others who might not be eligible for a traditional mortgage by themselves, by providing mortgage insurance to private lenders.
Interest rates for an FHA loan typically feature the going interest rate, while the down payment for an FHA loan will be smaller than those of conventional loans. The down payment may be as low as three percent while the closing costs might be packaged in the mortgage.
- VA mortgages
Guaranteed by the Department of Veterans Affairs, a VA loan assists service people and veterans. This special loan does not require a down payment, has limited closing costs, and provides a competitive rate of interest. While the mortgage loans don't originate from the VA, the department certifies borrowers by issuing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes with the first. In most cases the first mortgage covers 80% of the purchase price and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, instead of needing to put together the typical 20% down payment.
- Carry-Back loans
In the case of the seller "carrying back a second mortgage," the you borrow part of the seller's home equity.. The buyer funds most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Generally, this type of second mortgage has a higher rate of interest.
No matter how you gather your down payment, the satisfaction of reaching the goal of owning your own home will be just as great!
Want to discuss down payment options? Call us: 405-513-7700.