Your Down Payment
Many borrowers can qualify for various loan programs, but they don't have a lot of cash to pay the standard down payment. Here are a few methods that will help you put together your down payment
Cut expenses and save. Scrutinize the budget to discover ways you can cut expenses to go toward your down payment. You also could enroll in an automatic savings plan at your bank to have a percentage of your pay automatically deposited into a savings account. 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 move into less expensive housing, or stay close to home for your vacation.
Sell items you don't need and find a part-time job. Look for a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also get serious about the possessions you actually need and the items you can sell. You may have collectibles you can put up for sale at an auction website, or household goods for a garage or tag sale. You might also research what your investments could bring if sold.
Tap into your retirement funds. Investigate the provisions of your specific program. Many people get down payment money by withdrawing funds from their Individual Retirement Accounts or getting funds out of 401(k) programs. Be sure to find out about the tax consequences, repayment terms, and possible penalties for withdrawing early.
Ask for a generous gift from family. Many buyers somtimes receive help with their down payment assistance from gracious parents and other family members who are prepared to help them get into their first home. Your family members may be eager to help you reach the goal of owning your first home.
Learn about housing finance agencies. Provisional loan programs are given to homebuyers in certain situations, like low income purchasers or homebuyers looking to renovating homes in a specific part of town, among others. With the help of this kind of agency, you probably will get an interest rate that is below market, down payment assistance and other incentives. These types of agencies may help eligible homebuyers with a lower rate of interest, help with your down payment, and offer other benefits. The primary purpose of non-profit housing finance agencies is to boost the purchase of homes in particular parts of the city.
Explore no-down and low-down mortgage loans.
- FHA mortgages
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a vital part in aiding low and moderate-income families qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals who need to qualify for mortgage loans.
FHA assists first-time buyers and others who might not be able to qualify for a typical mortgage on their own, by providing mortgage insurance to lenders.
Interest rates for an FHA mortgage are typically the current interest rate, but the down payment for an FHA loan are lower than those of conventional loans. Closing costs can be covered by the mortgage, and your down payment could be as low as 3 percent of the total.
- VA mortgages
VA loans are guaranteed by the U.S. 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 limited closing costs. Even though the VA doesn't actually finance the loans, it does issue a certificate of eligibility to qualify for a VA loan.
- Piggy-back loans
You can finance a down payment through 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" funds 10%. Instead of the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.
- Carry-Back loans
In a "carry back" situation, the seller agrees to lend you some of his own equity to help you get your down payment money. In this scenario, you would finance the majority of the purchase price with a traditional lending institution and borrow the remaining amount from the seller. Usually you will pay a slightly higher rate with the loan financed by the seller.
No matter how you gather down payment funds, the satisfaction of reaching the goal of owning your own home will be just as great!
Need to talk about the best options for down payments? Give us a call at 952 417 8481.