Putting Together Your Down Payment
Lots of people who would like to buy a new home can qualify for several different kinds of mortgages, but they can't afford a large down payment. Here's where you start
Slash the budget and build up savings. Be on the look-out for ways to trim your expenditures to set aside money for a down payment. You also might enroll in an automatic savings plan at your bank to automatically have a specific amount from your take-home pay moved into savings. Some effective methods to put together funds include moving into less expensive housing, and staying home for your vacation for a year or two.
Sell items you do not really need and get a second job. Try to find an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the items you migh be able to sell. A closetful of small things can add up to a nice sum at a garage or tag sale. Also, you might want to look into selling any investments you hold.
Tap into retirement funds. Research the specifics for your particular plan. You may pull out money from a 401(k) for a down payment or perform a withdrawal from an Individual Retirement Account. You will need to ensure you understand about any penalties, the effect this will have on your income taxes, and repayment obligation.
Ask for assistance from family members. First-time buyers somtimes get help with their down payment help from gracious parents and other family members who are eager to help them get into their first home. Your family members may be willing to help you reach the milestone of owning your own home.
Learn about housing finance agencies. Special mortgage programs are given to buyers in certain circumstances, such as low income purchasers or people planning to remodel homes in a particular place, among others. Financing through this type of agency, you may be given a below market interest rate, down payment assistance and other incentives. These kinds of agencies can help eligible buyers with a lower rate of interest, get you your down payment, and provide other benefits. The primary purpose of not-for-profit housing finance agencies is to boost the purchase of homes in specific parts of the city.
Explore no-down and low-down mortgage loan programs.
- Federal Housing Administration (FHA) 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 buyers get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA provides mortgage insurance to the private lenders, enabling new homebuyers who might not be eligible for a typical mortgage loan, to receive a mortgage.
Down payment amounts for FHA loans are less than those of traditional mortgage loans, even though these mortgages hold average interest rates. Closing costs might be included in the mortgage, while the down payment can be as low as 3 percent of the total.
- VA loans
Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This specialized loan requires no down payment, has reduced closing costs, and provides the advantage of a competitive rate of interest. Although the mortgages are not actually issued by the VA, the office certifies applicants by issuing eligibility certificates.
- Piggy-back loans
You can finance a down payment using a second mortgage that closes along with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's price, while the first mortgage covers 80 percent. The homebuyer pays the remaining 10%, rather than having to put together the typical 20% down payment.
- Carry-Back loans
We a seller carries back a second mortgage, the you borrow a portion of the seller's home equity.. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with 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 which method you use to come up with the down payment. Your new home will be your reward!
Want to discuss your down payment? Call us at 719-357-6601.