Building Your Down Payment
Many people who are looking to buy a new house qualify for a mortgage loan, but they don't have much to put up the standard down payment. Here are a few straightforward methods that will help you get together your down payment
Slash the budget and build up savings. Scrutinize the budget to uncover ways you can cut expenses to save for your down payment. You could also decide to enroll in an automatic savings plan at your bank to have a percentage of your pay automatically transferred into a savings account. You might look into some big expenses in your spending history that you can live without, or reduce, at least temporarily. For example, you might move into less expensive housing, or stay close to home for your annual vacation.
Work a second job and sell things you do not need. Maybe you can find an additional job and build up your earnings. In addition, you can make an exhaustive list of items you can sell. Broken gold jewelry can bring a good price from local jewelry stores. Multiple small items can add up to a fair amount at a garage or tag sale. You can also look into what your investments could sell for.
Borrow money from a retirement plan. Explore the specifics for your particular plan. Some people get down payment money from withdrawing what they need from their IRAs or borrowing from their 401(k) programs. Be sure you understand about any penalties, the effect this could have on taxes, and repayment terms.
Ask for help from generous members of your family. First-time buyers are sometimes fortunate enough to receive help with their down payment help from giving parents and other family members who may be eager to help get them in their first home. Your family members may be inclined to help you reach the goal of buying your first home.
Learn about housing finance agencies. Special mortgage programs are extended to buyers in specific situations, like low income homebuyers or people planning to remodel houses in a certain neighborhood, among others. Financing with this type of agency, you can get an interest rate that is below market, down payment assistance and other advantages. These types of agencies may assist you with a reduced interest rate, help with your down payment, and provide other advantages. The main purpose of not-for-profit housing finance agencies is promoting the purchase of homes in targeted places.
Learn about low-down and no-down mortgage loan programs.
- FHA 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 families qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA provides mortgage insurance to private lenders, enabling homebuyers who will not qualify for a typical mortgage loan, to obtain a mortgage.
Down payment requirements for FHA mortgages are below those of traditional mortgages, even though these loans hold average rates of interest. The required down payment can be as low as three percent while the closing costs may be financed in the mortgage.
- VA loans
VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can get a VA loan, which usually offers a competitive fixed interest rate, no down payment, and limited closing costs. Although the VA does not actually issue the mortgages, it does certify eligibility to qualify for a VA loan.
- Piggy-back loans
You may fund your down payment with a second mortgage that closes at the same time as the first. Generally the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. The borrower covers the remaining 10%, instead of putting the usual 20% down payment.
- Carry-Back loans
We a seller carries back a second mortgage, the seller loans you part of his or her home equity. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lender and borrow the remainder from the seller. Usually you'll pay a somewhat higher interest rate on the loan from the seller.
No matter your method of putting together down payment funds, the thrill of owning your own home will be just as sweet!
Need to talk about your down payment? Give us a call: (786) 262-6486.