Building Your Down Payment
Lots of people who would like to buy a new house qualify for a mortgage loan, but they don't have much to put up a down payment. Below are a few straightforward ways to put together a down payment
Tighten your belt and save. Turn your budget upside-down to find extra money to go toward your down payment. Also, you can look into bank programs in which some of your paycheck is automatically deposited into a savings account every pay period. You would be wise to look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. For example, you might move into less expensive housing, or skip a vacation.
Work more and sell items you don't need. Perhaps you can find a second job and save your earnings. You can also get creative about the things you migh be able to sell. You might have collectibles you can sell at an online auction, or quality household items for a tag or garage sale. Also, you can look into selling any investments you hold.
Borrow money from your retirement plan. Investigate the parameters of your retirement program. Some homebuyers get down payment money from withdrawing funds from Individual Retirement Accounts or borrowing from 401(k) programs. Be sure you know about any penalties, the effect this could have on income taxes, and repayment obligation.
Ask for help from family members. First-time homebuyers somtimes receive help with their down payment assistance from gracious family members who are willing to help get them in their own home. Your family members may be eager to help you reach the goal of buying your first home.
Contact housing finance agencies. Special mortgage loans are provided to buyers in certain situations, such as low income buyers or homebuyers planning to renovating houses in a certain part of town, 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 advantages. Housing finance agencies may assist eligible homebuyers with a reduced interest rate, get you your down payment, and offer other advantages. These non-profit agencies to boost the value of homes in specific places.
Explore no-down and low-down mortgage loans.
- FHA mortgage loans
The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in assisting low and moderate-income families qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers in getting home financing.
FHA aids first-time homebuyers and others who may not be able to qualify for a typical mortgage loan by themselves, by providing mortgage insurance to private lenders.
Interest rates for an FHA loan normally feature the market interest rate, while the down payment with an FHA mortgage will be smaller than those of conventional loans. The required down payment may be as low as three percent while the closing costs might be financed in the mortgage loan.
- VA mortgages
With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This specialized loan requires no down payment, has limited closing costs, and provides the benefit of a competitive rate of interest. While the VA does not issue the mortgage loans, it does certify eligibility to apply for a VA mortgage.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close with the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. The borrower pays the remaining 10%, instead of having to put together the usual 20% down payment.
- Carry-Back loans
In a "carry back" agreement, the seller agrees to lend you a piece of his own equity to help you get your down payment funds. The buyer funds the majority of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually this type of second mortgage has higher interest.
No matter your strategy of putting together your down payment money, the thrill of reaching the goal of owning your own home will be just as sweet!
Need to talk about your down payment? Give us a call: (512) 291-6100.