Your Down Payment
Lots of buyers qualify for several different kinds of mortgages, but they don't have a large sum of cash to put up the standard down payment. We have a few ideas
Reduce expenses and save. Be on the look-out for ways to reduce your monthly expenditures to save toward a down payment. You also might enroll in an automatic savings plan to have a percentage of your payroll automatically moved into your savings account. You would be wise to look into some big expenses in your spending history that you can give up, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or stay local for your family vacation.
Sell items you don't need and get a second job. Perhaps you can find an additional job and save your earnings. In addition, you can put together a comprehensive list of things you may be able to sell. Broken gold jewelry can bring a good price from local jewelers. You might own collectibles you can sell on an auction website, or quality household goods for a garage or tag sale. You can also research what any investments you hold could bring if sold.
Borrow funds from a retirement plan. Investigate the provisions of your particular plan. Some homebuyers get down payment money by withdrawing from IRAs or getting money out of their 401(k) plans. Make sure you comprehend the tax consequences, repayment terms, and possible penalties for withdrawing early.
Ask for help from members of your family. Many buyers are often lucky enough to receive help with their down payment help from gracious parents and other family members who may be able to help them get into their first home. Your family members may be happy at the chance to help you reach the goal of owning your first home.
Research housing finance agencies. These types of agencies provide provisional mortgage programs for low and moderate-income borrowers, buyers with an interest in rehabilitating a house in a specific area, and other groups as defined by the agency. Financing with a housing finance agency, you may be given an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies may help you with a lower rate of interest, get you your down payment, and provide other assistance. The primary purpose of non-profit housing finance agencies is build up home ownership in targeted places.
Explore no-down and low-down mortgage loan programs.
- FHA loans
The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low and moderate-income Americans qualify for mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA aids first-time homebuyers and others who might not be able to qualify for a conventional mortgage loan by themselves, by offering mortgage insurance to lenders.
Interest rates with an FHA mortgage are generally the market interest rate, but the down payment for an FHA loan will be lower than those of conventional loans. The required down payment may go as low as 3 percent and the closing costs may be financed in the mortgage.
- VA mortgages
VA loans are backed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which typically offers a low rate of interest, no down payment, and limited closing costs. While the VA does not actually finance the loans, it does certify eligibility to qualify for a VA loan.
- Piggy-back loans
You may finance a down payment using a second mortgage that closes along 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 homebuyer just has to cover the remaining 10 percent.
- Carry-Back loans
In a "carry back" mortgage, the seller agrees to lend you a portion of his home equity to help you with your down payment money. The buyer finances most of the purchase price through a traditional mortgage program and borrows the remaining funds from the seller. Typically, this form of second mortgage has higher interest.
The feeling of accomplishment will be the same, no matter which method you use to come up with the down payment. Your brand new home will be worth it!
Want to discuss the best options for down payments? Give us a call: (434) 975-5626.