Building Your Down Payment
Lots of buyers can 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
Tighten your belt and save. Turn your budget inside out to discover extra money to save for your down payment. You also might enroll in an automatic savings plan to have a portion of your payroll automatically transferred into savings. You could look into some big expenses in your budget that you can do without, or trim, at least temporarily. For example, you might decide to move into less expensive housing, or skip a vacation.
Work a second job and sell items you don't need. Maybe you can find a second job to get your down payment money. You can also get creative about the items you can put up for sale. Multiple small items may add up to a nice sum at a garage or tag sale. You can also explore what any investments you hold may sell for.
Borrow from your retirement funds. Investigate the parameters of your retirement program. Some people get down payment money by withdrawing funds from their Individual Retirement Accounts or pulling funds out of 401(k) programs. Make sure to ask your plan representative about the tax ramifications, repayment terms, and possible early withdrawal penalties.
Ask for help from family members. Many homebuyers somtimes get down payment assistance from giving family members who are willing to help them get into their own home. Your family members may be willing to help you reach the goal of having your own home.
Research housing finance agencies. Special mortgage loans are given to homebuyers in specific circumstances, such as low income homebuyers or buyers looking to remodel homes in a specific place, among others. With the help of a housing finance agency, you probably will receive an interest rate that is below market, down payment assistance and other perks. These types of agencies can assist you with a reduced rate of interest, help with your down payment, and provide other assistance. The central mission of not-for-profit housing finance agencies is to boost the purchase of homes in targeted areas.
Find out about low-down and no-down mortgages.
- Federal Housing Administration (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 aiding low and moderate-income Americans qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA provides mortgage insurance to private lenders, making the buyers eligible for a mortgage.
Interest rates for an FHA loan are generally the market interest rate, but the down payment requirements with an FHA loan are lower than those of conventional loans. The required down payment can go as low as 3 percent while the closing costs may be included in the mortgage.
- VA mortgage loans
VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a reasonable fixed rate of interest, no down payment, and reduced closing costs. While it's true that the mortgages don't originate from the VA, the office certifies borrowers by issuing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close with the first. Usually the piggyback loan takes care of 10 percent of the home's amount, while the first mortgage finances 80 percent. The homebuyer pays the remaining 10%, instead of putting the usual 20% down payment.
- Carry-Back loans
In the case of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. In this scenario, you would finance the majority of the purchase price with a traditional lending institution and borrow the remainder from the seller. Usually this form of second mortgage will have higher interest.
No matter how you gather your down payment, the satisfaction of owning your own home will be just as sweet!
Want to discuss down payments? Give us a call: 9037471800.