Building Your Down Payment
Many people who would like to buy a new house can easily qualify for various loan programs, but they can't afford a large down payment. Do you want to look into getting a new house, but don't know how you should get together a down payment?
Cut expenses and save. Look for ways you can trim your expenditures to set aside 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 moved into savings. Some effective methods to build up funds include moving into less expensive housing, and staying home for your vacation this year.
Sell things you do not really need and get a second job. Maybe you can find an additional job to get your down payment money. You can also get creative about the items you could be able to put up for sale. You may own desirable items you can put up for sale on an auction website, or quality household items for a tag or garage sale. Also, you might want to consider selling any investments you own.
Borrow from retirement funds. Check the provisions of your retirement program. Many homebuyers get down payment money from withdrawing from Individual Retirement Accounts or borrowing from their 401(k) programs. Make sure you understand about any penalties, the way this will affect on your taxes, and repayment terms.
Ask for assistance from members of your family. Many buyers somtimes get down payment assistance from giving parents and other family members who are willing to help them get into their own home. Your family members may be happy at the chance to help you reach the milestone of owning your own home.
Research housing finance agencies. Special mortgage programs are extended to homebuyers in specific circumstances, such as low income homebuyers or homebuyers planning to remodel homes in a particular area, among others. Working with this type of agency, you may be given a below market interest rate, down payment assistance and other benefits. Housing finance agencies may help you with a reduced interest rate, get you your down payment, and offer other assistance. These non-profit agencies were formed to promote home ownership in specific areas.
Explore no-down and low-down mortgage loan programs.
- FHA mortgages
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in assisting low to moderate-income individuals qualify for mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages.
FHA provides mortgage insurance to private lenders, enabling homebuyers who may not be eligible for a typical mortgage, to receive a mortgage.
Interest rates with an FHA loan usually feature the market interest rate, but the down payment requirements for an FHA loan are below those of conventional loans. Closing costs can be included in the mortgage, and the down payment could be as low as 3% of the total amount.
- VA mortgages
VA loans are guaranteed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which usually offers a reasonable interest rate, no down payment, and reduced closing costs. While the mortgage loans don't originate from the VA, the department certifies applicants by providing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes along with the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase amount, and the first mortgage covers 80 percent. The homebuyer pays the remaining 10%, instead of come up with 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 finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually you will pay a somewhat higher interest rate on the loan from the seller.
The satisfaction will be the same, no matter which strategy you use to come up with your down payment. Your new home will be your reward!
Want to discuss the best options for down payments? Give us a call: (772) 252-6724.