Building Your Down Payment
Lots of borrowers can easily qualify for several different kinds of mortgages, but they don't have much to put up the standard down payment. Here's where to get started
Reduce expenses and save. Look for ways you can reduce your monthly expenses to put away money for a down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a predetermined portion of your take-home pay moved into savings. Some practical ways to put together funds include moving into a residence that is less expensive, and staying home for your family vacation for a year or two.
Sell things you don't need and get a second job. Look for an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get serious about the possessions you really need and the things you may be able to sell. Multiple small things could add up to a fair amount at a garage or tag sale. Also, you might want to look into selling any investments you hold.
Borrow from your retirement plan. Check the provisions of your particular plan. Some people get down payment money from withdrawing from their Individual Retirement Accounts or pulling money out of their 401(k) programs. Make sure you know about any penalties, the way this could affect on your taxes, and repayment terms.
Ask for assistance from generous members of your family. First-time buyers are sometimes lucky enough to get down payment help from gracious parents and other family members who are eager to help get them in their first home. Your family members may be pleased at the chance to help you reach the goal of buying your first home.
Contact housing finance agencies. These types of agencies offer special mortgate loan programs- for moderate and low income homebuyers, buyers interested in sprucing up a residence in a targeted area, and additional groups as specified by the finance agency. With the help of a housing finance agency, you probably will be given an interest rate that is below market, down payment help and other incentives. Housing finance agencies may assist you with a lower rate of interest, get you your down payment, and provide other benefits. These non-profit agencies exist to boost the value of homes in particular places.
Learn about low-down and no-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 assisting low and moderate-income families get mortgage loans. An office 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 new homebuyers who might not qualify for a traditional loan, to receive a mortgage.
Interest rates for an FHA loan generally feature the current interest rate, but the down payment amounts for an FHA mortgage are less than those of conventional loans. Closing costs may be covered by the mortgage, while the down payment could be as low as 3 percent of the total.
- VA mortgages
VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans are eligible for a VA loan, which usually offers a reasonable interest rate, no down payment, and reduced closing costs. While the VA does not actually provide the mortgage loans, it does issue a certificate of eligibility to qualify for a VA mortgage.
- Piggy-back loans
You can fund your down payment with a second mortgage that closes along with the first. Often the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than come up with the usual 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 equity. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a slightly higher rate on the loan financed by the seller.
No matter how you gather down payment money, the thrill of living in your own home will be just as sweet!
Need to talk about the best options for down payments? Call us at (337) 494-5626.