Putting Together Your Down Payment
Many people who are looking to buy a new house can qualify for various loan programs, but they don't have much to put up a down payment. Below are a few methods that will help you get together a down payment
Slash your budget and build up savings. Look for ways you can reduce your expenses to put away money for a down payment. You could also try enrolling in an automatic savings plan at your bank to automatically have a set amount from your take-home pay transferred into your savings account. Some practical strategies to save additional funds include moving into housing that is less expensive, and staying home for your vacation for a year or two.
Work more and sell items you don't need. Look for a second job. This can be exhausting, but the temporary difficulty can help you get your down payment. You can also get serious about the possessions you actually need and the things you could be able to put up for sale. Maybe you own collectibles you can sell at an auction website, or household goods for a garage or tag sale. Also, you can look into selling any investments you own.
Borrow from your retirement plan. Investigate the parameters of your retirement plan. It is possible to borrow funds from a 401(k) plan for a down payment or perform a withdrawal from an IRA. Make sure to find out about the tax ramifications, your obligation for repaying the money, and any early withdrawal penalties.
Ask for a gift from family. Many buyers are often lucky enough to receive help with their down payment help from gracious parents and other family members who are prepared to help get them in their first home. Your family members may be pleased to help you reach the goal of buying your first home.
Contact housing finance agencies. These agencies extend special mortgage programs to low and moderate-income borrowers, buyers interested in remodeling a house in a particular area, and other groups as specified by the finance agency. With the help of a housing finance agency, you can get an interest rate that is below market, down payment assistance and other incentives. These kinds of agencies may assist eligible homebuyers with a lower interest rate, get you your down payment, and offer other assistance. The main goal of not-for-profit housing finance agencies is promoting residential ownership in specific areas.
Find out about low-down and no-down mortgages.
- 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 assisting low and moderate-income Americans qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to get home financing.
FHA aids first-time buyers and others who may not be able to qualify for a traditional loan on their own, by providing mortgage insurance to the lenders.
Interest rates with an FHA loan are generally the market interest rate, but the down payment for an FHA loan will be below those of conventional loans. Closing costs can be included in the mortgage, while your down payment can be as low as 3 percent of the total.
- VA mortgage loans
VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people qualify for a VA loan, which generally offers a reasonable fixed interest rate, no down payment, and reduced closing costs. Even though the loans don't originate from the VA, the department certifies applicants by issuing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close along with the first. Usually the piggyback loan is for 10 percent of the home's amount, and the first mortgage finances 80 percent. The borrower covers the remaining 10%, instead of come up with the usual 20% down payment.
- Carry-Back loans
In a "carry back" agreement, the seller commits to loan you a piece of his own equity to assist you with your down payment money. In this scenario, you would borrow the largest portion of the purchase price from a traditional mortgage lending institution and borrow the remaining amount from the seller. Typically you'll pay a somewhat higher rate on the loan financed by the seller.
The feeling of accomplishment will be the same, no matter how you manage to get together your down payment. Your brand new home will be your reward!
Want to discuss your down payment? Give us a call: (772) 252-6724.