Your Down Payment
Lots of folks who are looking to purchase a new home 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's where you start
Cut expenses and save. Scrutinize the budget to discover ways you can cut expenses to save for your down payment. You also could enroll in an automatic savings plan at your bank to have a percentage of your pay automatically deposited into your savings account. Some practical methods to save additional funds include moving into housing that is less expensive, and staying local for your family vacation for a year or two.
Work more and sell items you do not need. Maybe you can find a second job and save your earnings. You can also get creative about the items you may be able to put up for sale. Maybe you have collectibles you can sell on an online auction, or quality household items for a tag or garage sale. You might also look into what your investments will sell for.
Borrow from your retirement funds. Investigate the parameters of your specific plan. It is possible to pull out money from a 401(k) for you down payment or make a withdrawal from an IRA. Be sure you understand the tax ramifications, repayment terms, and any early withdrawal penalties.
Request a gift from family. First-time buyers are sometimes lucky enough to receive help with their down payment assistance from caring family members who may be anxious to help get them in their own home. Your family members may be inclined to help you reach the goal of having your first home.
Contact housing finance agencies. These types of agencies provide provisional mortgage loans for moderate and low income buyers, buyers interested in sprucing up a residence in a targeted part of the city, and additional specific types of buyers as specified by each agency. With the help of this kind of agency, you may be given a below market interest rate, down payment assistance and other incentives. These kinds of agencies may help eligible homebuyers with a reduced rate of interest, get you your down payment, and provide other advantages. The principal goal of non-profit housing finance agencies is to promote the purchase of homes in certain places.
Research no-down and low-down mortgages.
- Federal Housing Administration (FHA) mortgage loans
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low to moderate-income buyers get mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA offers mortgage insurance to private lenders, making the buyers eligible for financing.
Interest rates for an FHA loan typically feature the going interest rate, but the down payment with an FHA loan are smaller than those of conventional loans. The required down payment can go as low as three percent while the closing costs may be financed in the mortgage loan.
- VA loans
Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This specialized loan does not require a down payment, has limited closing costs, and offers a competitive interest rate. While it's true that the mortgages aren't actually issued by the VA, the office verfifies borrowers by providing eligibility certificates.
- Piggy-back loans
You can finance a down payment with a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan is for 10 percent of the home's amount, while the first mortgage finances 80 percent. Rather than the traditional 20 percent down payment, the homebuyer just has to cover the remaining 10 percent.
- Carry-Back loans
In a "carry back" situation, the seller commits to lend you some of his home equity to assist you with your down payment money. The buyer funds the majority of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Usually you'll pay a somewhat higher interest rate on the loan financed by the seller.
No matter your method of pulling together your down payment, the satisfaction of reaching the goal of owning your own home will be just as sweet!
Need to talk about down payment options? Give us a call at (512) 291-6100.