Putting Together Your Down Payment
Many folks who are looking to buy a new house qualify for a mortgage loan, but they don't have much to pay the standard down payment. Do you want to buy a new house, but aren't sure how you should get together your down payment?
Reduce expenses and save. Look for ways you can trim your monthly expenses to put away money for a down payment. Also, you can look into bank programs in which a specific portion of your take-home pay is automatically placed into savings each pay period. You might look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you might move into less expensive housing, or skip a vacation.
Sell items you do not really need and find a second job. Look for an additional job. This can be exhausting, but the temporary difficulty can provide your down payment money. Additionally, you can make an exhaustive list of things you can sell. Broken gold jewelry can be sold at local jewelry stores. A closetful of small items may add up to a nice sum at a garage or tag sale. Also, you might want to think about selling any investments you hold.
Tap into retirement funds. Research the details of your particular plan. You may borrow money from a 401(k) for a down payment or withdraw from an IRA. Make sure you understand about any penalties, the way this will affect on your taxes, and repayment obligation.
Request a gift from family. Many homebuyers are often lucky enough to get down payment help from giving parents and other family members who are anxious to help them get into their first home. Your family members may be inclined to help you reach the milestone of buying your own home.
Research housing finance agencies. Provisional mortgate loan programs are offered to buyers in certain circumstances, like low income buyers or homebuyers looking to improve homes in a specific area, among others. Working with a housing finance agency, you can get a below market interest rate, down payment help and other advantages. Housing finance agencies can assist you with a reduced rate of interest, get you your down payment, and provide other assistance. The central mission of not-for-profit housing finance agencies is boosting the purchase of homes in certain parts of the city.
Research no-down and low-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 buyers get mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists individuals in getting home financing.
FHA provides mortgage insurance to the private lenders, enabling homebuyers who may not qualify for a conventional loan, to get a mortgage.
Interest rates for an FHA mortgage generally feature the current interest rate, but the down payment for an FHA loan are lower than those of conventional loans. Closing costs may be financed in the mortgage, while your down payment could be as low as 3 percent of the purchase price.
- VA mortgage loans
VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which generally offers a competitive fixed interest rate, no down payment, and minimal closing costs. While the mortgage loans aren't actually financed by the VA, the department certifies applicants by providing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes at the same time as the first. Usually the piggyback loan is for 10 percent of the purchase amount, and the first mortgage covers 80 percent. Rather than the traditional 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.
- Carry-Back loans
In a "carry back" agreement, the seller commits to loan you part of his own equity to help you get your down payment money. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remainder from the seller. Usually this form of second mortgage will have a higher rate of interest.
The feeling of accomplishment will be the same, no matter how you manage to come up with your down payment. Your brand new home will be well worth it!
Need to talk about down payments? Call us at 972-932-9083.