Your Down Payment
Lots of folks who would like to purchase a new home can easily qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to buy a new house, but aren't sure how you should put together a down payment?
Slash your budget and build up savings. Look for ways to trim your monthly expenditures to set aside funds for a down payment. There are bank programs through which a portion of your paycheck is automatically deposited into a savings account every pay period. Some effective strategies to save additional funds include moving into housing that is less expensive, and skipping a year's vacation.
Work a second job and sell items you do not need. Try to get a second 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 can put up for sale. You may have collectibles you can sell on an online auction, or quality household goods for a garage or tag sale. Also, you can consider selling any investments you own.
Tap into your retirement funds. Investigate the parameters of your specific program. You can pull out funds from a 401(k) plan for a down payment or withdraw from an IRA. Make sure you understand about any penalties, the effect this could have on your taxes, and repayment terms.
Ask for a gift from your family. First-time homebuyers are often fortunate enough to receive help with their down payment assistance from giving family members who may be prepared to help get them in their own home. Your family members may be willing to help you reach the milestone of having your first home.
Research housing finance agencies. These agencies offer special mortgage programs to low and moderate-income borrowers, buyers with an interest in remodeling a home in a targeted area, and additional groups as defined by the agency. With the help of a housing finance agency, you probably will receive a below market interest rate, down payment assistance and other benefits. These types of agencies may assist eligible buyers with a lower interest rate, get you your down payment, and provide other benefits. The central purpose of non-profit housing finance agencies is promoting the purchase of homes in certain areas.
Learn about low-down and no-down mortgage loans.
- Federal Housing Administration (FHA) mortgage loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low to moderate-income individuals get mortgages. An office of the United States 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 eligible for a traditional mortgage on their own, by providing mortgage insurance to private lenders.
Interest rates with an FHA loan usually feature the market interest rate, while the down payment requirements for an FHA mortgage will be lower than those of conventional loans. Closing costs may be covered by the mortgage, while your down payment could be as low as 3% of the total.
- VA mortgage loans
With a guarantee from the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This specialized loan requires no down payment, has mimimal closing costs, and provides a competitive interest rate. Even though the mortgage loans don't originate from the VA, the department verfifies applicants by providing eligibility certificates.
- Piggy-back loans
You can fund your down payment through a second mortgage that closes with the first. Generally the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The borrower covers the remaining 10%, rather than needing to pull together the typical 20% down payment.
- Carry-Back loans
With a carry-back mortgage, the you borrow part of the seller's home equity.. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a slightly higher rate on the loan from the seller.
No matter how you gather your down payment, the satisfaction of reaching the goal of living in your own home will be just as great!
Need to talk about down payments? Call us at 952 417 8481.