Your Down Payment
Lots of borrowers can easily qualify for various loan programs, but they don't have much to put up a down payment. Here are a few ways to put together your down payment
Tighten your belt and save. Look for ways to trim your monthly expenditures to put away money for a down payment. You could also try enrolling in an automatic savings plan to automatically have a specific amount from your take-home pay transferred into savings. Some effective ways to save additional funds include moving into less expensive housing, and skipping a year's vacation.
Work more and sell items you do not need. Maybe you can find an additional job and save your earnings. Additionally, you can put together an exhaustive list of things you can sell. Unworn gold jewelry can bring a good amount from local jewelers. Maybe you have desirable items you can sell on an online auction, or household goods for a garage or tag sale. You might also research what your investments could sell for.
Borrow funds from a retirement plan. Check the provisions of your specific plan. It is possible to take out funds from a 401(k) for you down payment or withdraw from an IRA. You will want to be sure you are clear about any penalties, the way this will affect on your taxes, and repayment obligation.
Ask for help from family members. Many buyers are often fortunate enough to get down payment assistance from caring family members who may be anxious to help them get into their first home. Your family members may be eager to help you reach the goal of buying your first home.
Contact housing finance agencies. Special loan programs are extended to buyers in specific circumstances, such as low income purchasers or buyers looking to renovating houses in a specific part of town, among others. With the help of this kind of agency, you can receive an interest rate that is below market, down payment assistance and other advantages. These types of agencies can assist you with a reduced rate of interest, get you your down payment, and offer other benefits. The primary goal of non-profit housing finance agencies is promoting the purchase of homes in targeted areas.
Learn about low-down and no-down mortgages.
- FHA mortgage loans
The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low to moderate-income buyers qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages.
FHA helps first-time homebuyers and others who would not be eligible for a typical mortgage loan by themselves, by providing mortgage insurance to the lenders.
Interest rates with an FHA mortgage usually feature the market interest rate, but the down payment for an FHA loan will be below those of conventional loans. The down payment can be as low as three percent while the closing costs could be financed in the mortgage.
- VA mortgages
VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans are eligible for a VA loan, which typically offers a competitive rate of interest, no down payment, and minimal closing costs. While the mortgages don't originate from the VA, the department certifies applicants by providing eligibility certificates.
- Piggy-back loans
You may fund a down payment through a second mortgage that closes with the first. Generally the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. Rather than the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
In a "carry back" situation, the seller agrees to loan you a piece of his home equity to help you get your down payment funds. You would finance the majority of the purchase price with a traditional mortgage lender and borrow the remaining amount from the seller. Often, this kind of second mortgage will have higher interest.
No matter how you gather down payment funds, the satisfaction of living in your own home will be just as great!
Want to discuss down payments? Call us at (203) 526-9345.