Your Down Payment
Lots of people who would like to purchase a new home can easily qualify for various loan programs, but they can't afford a large down payment. We have a few suggestions
Reduce expenses and save. Scrutinize the budget to uncover extra money to go toward your down payment. There are bank programs through which a portion of your take-home pay is automatically placed into savings each pay period. You might look into some big expenses in your budget that you can give up, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay local for your vacation.
Work a second job and sell items you don't need. Look for a second job. This can be rough, but the temporary trial can provide your down payment money. You can also seriously consider the possessions you actually need and the items you can put up for sale. A closetful of small things can add up to a fair amount at a garage or tag sale. You might also research what your investments may bring if sold.
Borrow your down payment from your retirement plan. Research the details of your particular plan. Many people get down payment money by withdrawing from their Individual Retirement Accounts or pulling funds out of their 401(k) programs. Make sure you comprehend the tax ramifications, your obligation for repayment, and penalties for withdrawing early.
Request a generous gift from your family. Many buyers are often lucky enough to get down payment assistance from thoughtful family members who are able to help them get into their own home. Your family members may be inclined to help you reach the goal of having your own home.
Contact housing finance agencies. Provisional mortgage loans are extended to buyers in specific circumstances, such as low income buyers or homebuyers planning to renovating homes in a particular area, among others. With the help of a housing finance agency, you probably will get an interest rate that is below market, down payment help and other incentives. Housing finance agencies can assist eligible buyers with a lower rate of interest, get you your down payment, and offer other assistance. The primary purpose of not-for-profit housing finance agencies is boosting home ownership in targeted places.
Research no-down and low-down mortgage loan programs.
- Federal Housing Administration (FHA) loans
The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low and moderate-income individuals qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in qualifying for mortgage loans.
FHA assists first-time buyers and others who may not be eligible for a traditional mortgage loan on their own, by offering mortgage insurance to the private lenders.
Interest rates with an FHA loan normally feature the market interest rate, but the down payment with an FHA loan will be lower than those of conventional loans. The down payment may be as low as 3 percent while the closing costs may be packaged in the mortgage loan.
- VA loans
VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which usually offers a competitive fixed rate of interest, no down payment, and minimal closing costs. While the mortgage loans are not actually financed by the VA, the department certifies borrowers by issuing eligibility certificates.
- Piggy-back loans
You may fund a down payment with a second mortgage that closes with the first. Generally the piggyback loan is for 10 percent of the home's amount, while the first mortgage covers 80 percent. The homebuyer pays the remaining 10%, instead of needing to pull together the usual 20% down payment.
- Carry-Back loans
With a carry-back mortgage, the you borrow a portion of the seller's home equity.. In this scenario, you would finance the majority of the purchase price with a traditional lending institution and finance the remainder with the seller. Typically you will pay a slightly higher interest rate on the loan from the seller.
The satisfaction will be the same, no matter which approach you use to put together your down payment. Your brand new home will be your reward!
Need to talk about down payments? Give us a call at 405-513-7700.