Putting Together Your Down Payment
Lots of borrowers qualify for various loan programs, but they can't afford a large down payment. Want to look into getting a new home, but aren't sure how you should get together a down payment?
Reduce expenses and save. Look for ways you can trim your monthly expenditures to save toward a down payment. Also, you can look into bank programs through which a specific portion of your take-home pay is automatically deposited into a savings account each pay period. You would be wise to look into some big expenses in your spending history that you can give up, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or skip a vacation.
Sell items you don't need and find a second job. Maybe you can get an additional job to get your down payment money. You can also get creative about the items you can sell. You may own desirable items you can put up for sale at an auction website, or quality household goods for a garage or tag sale. You could also research what any investments you have may sell for.
Borrow money from your retirement plan. Investigate the provisions of your specific program. You may take out funds from a 401(k) plan for you down payment or withdraw from an Individual Retirement Account. Make sure you are clear about any penalties, the effect this could have on taxes, and repayment terms.
Request a generous gift from your family. Many homebuyers are often fortunate enough to receive down payment assistance from thoughtful family members who are able to help get them in their first home. Your family members may be pleased to help you reach the milestone of owning your first home.
Contact housing finance agencies. These types of agencies provide provisional loan programs to moderate and low income borrowers, buyers interested in remodeling a home within a particular part of the city, and other specific types of buyers as defined by the finance agency. Financing through this kind of agency, you may receive a below market interest rate, down payment help and other perks. These kinds of agencies may assist you with a reduced interest rate, get you your down payment, and offer other advantages. The principal purpose of not-for-profit housing finance agencies is to promote home ownership in certain parts of the city.
Explore no-down and low-down mortgage loans.
- FHA loans
The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a vital part in aiding low and moderate-income buyers get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA helps first-time homebuyers and others who might not be able to qualify for a traditional mortgage loan by themselves, by offering mortgage insurance to the private lenders.
Interest rates for an FHA mortgage typically feature the going interest rate, but the down payment requirements for an FHA loan will be smaller than those of conventional loans. Closing costs might be financed within the mortgage, while your down payment may be as low as 3 percent of the total amount.
- VA mortgages
VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which usually offers a low rate of interest, no down payment, and limited closing costs. While it's true that the mortgages aren't actually financed by the VA, the department verfifies applicants by issuing eligibility certificates.
- Piggy-back loans
You may finance your down payment with a second mortgage that closes at the same time as the first. Generally the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage covers 80 percent. The homebuyer covers the remaining 10%, rather than putting the typical 20% down payment.
- Carry-Back loans
In the option of a seller "carrying back a second mortgage," the seller loans you part of his or her home equity. You would finance the largest portion of the purchase price with a traditional mortgage lender and finance the remainder with the seller. Usually you will pay a somewhat higher rate with the loan from the seller.
No matter your method of pulling together your down payment money, the thrill of reaching the goal of living in your own home will be just as great!
Want to discuss the best options for down payments? Give us a call at (786) 262-6486.