Your Down Payment
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Many folks who would like to buy a new house qualify for various loan programs, but they can't afford a large down payment. Below are a few straightforward ways to get together a down payment
Cut expenses and save. Look for ways you can reduce your expenses to set aside funds for a down payment. You also could enroll in an automatic savings plan to automatically have a specific amount from your paycheck deposited into savings. You might look into some big expenses in your budget that you can do without, or reduce, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or skip a family vacation.
Work more and sell things you don't need. Perhaps you can get an additional job and build up your earnings. In addition, you can put together an exhaustive list of things you may be able to sell. Unworn gold jewelry can be sold at local jewelers. Multiple small items might add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you own.
Tap into retirement funds. Check the provisions of your retirement plan. You can borrow money from a 401(k) for a down payment or withdraw from an IRA. Be sure you understand the tax consequences, your obligation for repaying the money, and any early withdrawal penalties.
Request a gift from family. First-time buyers are sometimes lucky enough to get help with their down payment assistance from thoughtful family members who are willing to help get them in their first home. Your family members may be eager to help you reach the goal of having your own home.
Research housing finance agencies. These agencies extend special mortgage loans to low and moderate-income buyers, buyers interested in sprucing up a home in a particular area, and additional particular types of buyers as specified by the agency. Working through this type of agency, you probably will be given a below market interest rate, down payment assistance and other benefits. Housing finance agencies can assist you with a reduced interest rate, help with your down payment, and provide other benefits. These non-profit agencies to promote home ownership in particular neighborhoods.
Explore no-down and low-down mortgage loan programs.
- 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 to moderate-income Americans qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA offers mortgage insurance to the private lenders, helping the buyers to become eligible for a mortgage.
Down payment amounts for FHA loans are below those with traditional mortgages, even though these loans come with average interest rates. Closing costs might be financed within the mortgage, and your down payment may be as low as 3% of the total.
- VA mortgages
With a guarantee from the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This particular loan does not require a down payment, has limited closing costs, and provides the advantage of a competitive rate of interest. While it's true that the mortgages don't originate from the VA, the department verifies borrowers by providing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes along with the first. In most cases the first mortgage covers 80% of the cost of the home and the "piggyback" is for 10%. Rather than the usual 20 percent down payment, the buyer just has to cover the remaining 10 percent.
- Carry-Back loans
In the option of a seller "carrying back a second mortgage," the seller loans you part of his or her equity. You would borrow the largest portion of the purchase price from a traditional mortgage lender and borrow the remaining amount from the seller. Typically you will pay a slightly higher rate with the loan financed by the seller.
No matter your strategy of putting together your down payment funds, the thrill of reaching the goal of living in your own home will be just as sweet!
Want to discuss down payment options? Give us a call at 303-220-7500.