Your Down Payment
Many buyers qualify for various loan programs, but they can't afford a large down payment. We have a few suggestions
Slash the budget and build up savings. Scrutinize your budget to discover ways you can cut expenses to save for your down payment. You could also try enrolling in an automatic savings plan to automatically have a set portion of your take-home pay moved into savings. You might look into some big expenses in your spending history that you can live without, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or stay close to home for your family vacation.
Work a second job and sell things you do not need. Look for a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get creative about the things you migh be able to sell. A closetful of small items may add up to a nice sum at a garage or tag sale. You could also explore what your investments will bring if sold.
Tap into your retirement funds. Research the details of your particular plan. Many homebuyers get down payment money by withdrawing what they need from Individual Retirement Accounts or borrowing from their 401(k) plans. Be sure you understand the tax consequences, repayment terms, and possible penalties for withdrawing early.
Ask for assistance from members of your family. Many buyers are often lucky enough to get down payment help from caring family members who are anxious to help them get into their first home. Your family members may be willing to help you reach the goal of having your first home.
Contact housing finance agencies. Provisional mortgage programs are offered to buyers in specific circumstances, such as low income purchasers or future homeowners planning to remodel homes in a certain place, among others. Working with this kind of agency, you can get a below market interest rate, down payment help and other perks. These types of agencies may help you with a reduced rate of interest, help with your down payment, and offer other benefits. These non-profit agencies to boost home ownership in particular areas.
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 role in aiding low to moderate-income individuals qualify for mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who need to get home financing.
FHA helps first-time homebuyers and others who would not be eligible for a conventional loan on their own, by offering mortgage insurance to lenders.
Down payment sums for FHA mortgages are lower than those for traditional mortgages, although these mortgages have average rates of interest. The required down payment may be as low as three percent while the closing costs can be packaged in the mortgage loan.
- VA loans
Guaranteed by the Department of Veterans Affairs, a VA loan assists veterens and service people. This special loan does not require a down payment, has limited closing costs, and provides the benefit of a competitive rate of interest. Although the mortgages aren't actually issued by the VA, the office certifies borrowers by issuing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes along with the first. Most of the time, the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. In contrast to the usual 20 percent down payment, the homebuyer just has to pull together the remaining 10 percent.
- Carry-Back loans
In a "carry back" agreement, the seller agrees to lend you a portion of his own equity to assist you with your down payment funds. The buyer funds the highest percentage of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Usually this kind of second mortgage will have higher interest.
The feeling of accomplishment will be the same, no matter which approach you use to come up with your down payment. Your brand new home will be well worth it!
Want to discuss your down payment? Give us a call: (512) 291-6100.