Building Your Down Payment
Lots of borrowers qualify for a loan, but they can't afford a large down payment. We have a few ideas
Tighten your belt and save. Be on the look-out for ways you can reduce your monthly expenditures to save toward a down payment. You also might enroll in an automatic savings plan at your bank to automatically have a predetermined amount from your paycheck deposited into a savings account. You could look into some big expenses in your spending history that you can live without, or trim, at least temporarily. For example, you may move into less expensive housing, or stay close to home for your annual vacation.
Sell things you don't really need and get a second job. Maybe you can find an additional job and build up your earnings. In addition, you can put together an exhaustive list of items you can sell. Broken gold jewelry can bring a good price from local jewelers. Maybe you have collectibles you can put up for sale at an auction website, or quality household goods for a garage or tag sale. Also, you might want to think about selling any investments you own.
Tap into retirement funds. Explore the specifics of your particular plan. It is possible to take out money from a 401(k) for you down payment or make a withdrawal from an Individual Retirement Account. Make sure you comprehend the tax ramifications, repayment terms, and penalties for withdrawing early.
Request a generous gift from your family. Many homebuyers are often fortunate enough to get down payment help from giving parents and other family members who are willing to help them get into their first home. Your family members may be pleased to help you reach the goal of owning your own home.
Research housing finance agencies. These types of agencies offer special mortgage programs for moderate and low income buyers, buyers with an interest in rehabilitating a house in a targeted part of the city, and other certain kinds of buyers as specified by each agency. With the help of a housing finance agency, you can be given a below market interest rate, down payment help and other perks. These kinds of agencies can help you with a reduced interest rate, help with your down payment, and offer other advantages. The central mission of non-profit housing finance agencies is build up residential ownership in specific places.
Explore no-down and low-down mortgages.
- FHA loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income buyers get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting home financing.
FHA helps first-time homebuyers and others who may not be eligible for a typical mortgage loan on their own, by offering mortgage insurance to private lenders.
Down payment totals for FHA loans are lower than those with traditional mortgage loans, although these mortgages come with average rates of interest. Closing costs might be included in the mortgage, and the down payment can be as low as 3% of the purchase price.
- VA loans
Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This specialized loan requires no down payment, has reduced closing costs, and provides a competitive interest rate. Even though the mortgage loans are not actually issued by the VA, the department certifies applicants by issuing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close at the same time as the first. Most of the time, the first mortgage covers 80% of the purchase amount and the "piggyback" is for 10%. The homebuyer covers the remaining 10%, instead of having to put together the typical 20% down payment.
- Carry-Back loans
We a seller carries back a second mortgage, the seller loans you part of his or her home equity. In this scenario, you would finance the largest portion of the purchase price with a traditional mortgage lending institution and finance the remainder with the seller. Often, this kind of second mortgage has higher interest.
The satisfaction will be the same, no matter how you manage to come up with your down payment. Your brand new home will be your reward!
Want to discuss down payments? Call us at 719-357-6601.