Putting Together Your Down Payment
Lots of people who are looking to purchase a new house qualify for various loan programs, but they can't afford a large down payment. Below are a few methods that will help you get together your down payment
Tighten your belt and save. Scrutinize your budget to uncover extra money to save for your down payment. You may also decide to enroll in an automatic savings plan at your bank to automatically have a specific amount from your paycheck transferred into savings. Some effective strategies to put together funds include moving into less expensive housing, and staying local for your vacation this year.
Work a second job and sell items you do not need. Look for a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. Additionally, you can put together an exhaustive list of items you may be able to sell. Unworn gold jewelry can bring a good price from local jewelers. Maybe you own collectibles you can put up for sale on an online auction, or quality household goods for a tag or garage sale. Also, you might want to think about selling any investments you own.
Tap into retirement funds. Research the details of your individual plan. Some people get down payment money from withdrawing funds from their IRAs or borrowing from their 401(k) plans. Make sure to ask your plan representative about the tax consequences, repayment terms, and possible early withdrawal penalties.
Ask for help from members of your family. Many homebuyers somtimes receive down payment assistance from gracious family members who are able to help get them in their first home. Your family members may be pleased at the chance to help you reach the milestone of buying your first home.
Contact housing finance agencies. These types of agencies offer special loan programs for moderate and low income homebuyers, buyers interested in remodeling a home in a particular part of the city, and other specific types of buyers as specified by each finance agency. With the help of a housing finance agency, you can receive an interest rate that is below market, down payment help and other benefits. These kinds of agencies may assist eligible buyers with a lower interest rate, help with your down payment, and provide other benefits. The main purpose of non-profit housing finance agencies is boosting the purchase of homes in certain areas.
Explore no-down and low-down mortgage loan programs.
- 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 helping low to moderate-income Americans qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages.
FHA offers mortgage insurance to the private lenders, making the buyers eligible for financing.
Down payment amounts for FHA mortgages are smaller than those for traditional mortgage loans, although these loans come with average interest rates. Closing costs can be financed within the mortgage, and your down payment may be as low as 3 percent of the total amount.
- VA mortgage loans
VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can get a VA loan, which generally offers a reasonable fixed rate of interest, no down payment, and limited closing costs. While it's true that the loans are not actually issued by the VA, the department certifies borrowers by providing eligibility certificates.
- Piggy-back loans
You can fund your down payment using a second mortgage that closes with the first. Generally the first mortgage is for 80% of the purchase amount and the "piggyback" is for 10%. The borrower covers the remaining 10%, rather than putting the typical 20% down payment.
- Carry-Back loans
We a seller carries back a second 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 somewhat higher rate with the loan from the seller.
No matter how you gather down payment money, the satisfaction of owning your own home will be just as great!
Want to discuss down payments? Call us: 720-598-8300.