Your Down Payment
Lots of buyers can easily qualify for a loan, but they can't afford a large down payment. Do you want to look into getting a new house, but don't know how to put together your down payment?
Slash your budget and build up savings. Scrutinize the budget to find ways you can cut expenses to go toward your down payment. Also, you can look into bank programs through 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 live without, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or skip a family vacation.
Sell items you do not need and get a part-time job. Perhaps you can find an additional job to get your down payment money. You can also get creative about the things you migh be able to sell. You might own collectibles you can sell on an online auction, or quality household items for a garage or tag sale. Also, you can look into selling any investments you hold.
Tap into your retirement funds. Investigate the parameters of your particular plan. Some people get down payment money from withdrawing funds from IRAs or pulling funds out of 401(k) programs. Be sure you understand about any penalties, the effect this could have on your taxes, and repayment obligation.
Ask for help from family members. Many homebuyers are sometimes lucky enough to get down payment assistance from gracious parents and other family members who may be willing to help get them in their own home. Your family members may be happy at the chance to help you reach the milestone of owning your own home.
Research housing finance agencies. Provisional loan programs are offered to homebuyers in certain situations, such as low income buyers or buyers planning to remodel houses in a targeted place, among others. With the help of a housing finance agency, you probably will get a below market interest rate, down payment help and other benefits. Housing finance agencies can assist eligible homebuyers with a reduced rate of interest, help with your down payment, and offer other benefits. These non-profit agencies were formed to promote the value of homes in particular places.
Find out about low-down and no-down mortgage loan programs.
- Federal Housing Administration (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 part in helping low and moderate-income individuals get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to get mortgages.
FHA provides mortgage insurance to the private lenders, enabling homebuyers who may not be eligible for a conventional mortgage, to obtain a mortgage.
Interest rates for an FHA loan generally feature the going interest rate, while the down payment requirements for an FHA mortgage are below those of conventional loans. Closing costs might be covered by the mortgage, and your down payment might be as low as 3 percent of the total amount.
- VA loans
With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This particular loan requires no down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. Even though the loans don't originate from the VA, the department certifies applicants by issuing eligibility certificates.
- Piggy-back loans
You can fund your down payment through a second mortgage that closes along with the first. Usually the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of come up with the usual 20% down payment.
- Carry-Back loans
With a carry-back mortgage, the seller loans you part of his or her home equity. You would finance the majority of the purchase price with a traditional mortgage lender and finance the remaining amount with the seller. Typically you'll pay a slightly higher rate on the loan from the seller.
The feeling of accomplishment will be the same, no matter which strategy you use to come up with your down payment. Your brand new home will be your reward!
Want to discuss your down payment? Give us a call at (512) 291-6100.