Building Your Down Payment
Lots of folks who would like to buy a new home qualify for various loan programs, but they don't have a lot of money to pay the standard down payment. Here are a few methods that will help you put together a down payment
Tighten your belt and save. Be on the look-out for ways to trim your expenditures to save toward a down payment. You might also try enrolling in an automatic savings plan at your bank to automatically have a set amount from your paycheck moved into a savings account. You could look into some big expenses in your budget that you can do without, or trim, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay local for your family vacation.
Sell items you do not need and find a second job. Perhaps you can get an additional job to get your down payment money. You can also get creative about the items you can sell. A closetful of small items may add up to a fair amount at a garage or tag sale. Also, you might want to think about selling any investments you hold.
Borrow money from your retirement plan. Research the specifics of your individual plan. Many homebuyers get down payment money from withdrawing what they need from Individual Retirement Accounts or getting funds out of their 401(k) plans. Be sure you know about any penalties, the way this may affect on your income taxes, and repayment terms.
Request a generous gift from family. First-time buyers are sometimes fortunate enough to receive help with their down payment assistance from gracious parents and other family members who may be able to help them get into their own home. Your family members may be eager to help you reach the goal of buying your own home.
Contact housing finance agencies. Provisional loan programs are provided to buyers in certain circumstances, like low income purchasers or people planning to renovating houses in a specific neighborhood, among others. Financing through this type of agency, you may get an interest rate that is below market, down payment help and other perks. Housing finance agencies can help eligible buyers with a lower interest rate, get you your down payment, and provide other benefits. These non-profit programs to build up home ownership in particular neighborhoods.
Research no-down and low-down mortgage loans.
- Federal Housing Administration (FHA) mortgage loans
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low to moderate-income individuals qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to qualify for mortgages.
FHA aids first-time homebuyers and others who would not be able to qualify for a typical mortgage loan by themselves, by offering mortgage insurance to lenders.
Down payment totals for FHA mortgages are lower than those of traditional mortgages, even though these loans come with current rates of interest. Closing costs can be financed in the mortgage, and the down payment might be as low as 3 percent of the purchase price.
- VA loans
VA loans are backed by the U.S. Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a low fixed rate of interest, no down payment, and reduced closing costs. While the VA doesn't actually finance the mortgage loans, it does certify eligibility to apply for a VA loan.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close with the first. Generally the piggyback loan is for 10 percent of the home's amount, and the first mortgage finances 80 percent. The homebuyer covers the remaining 10%, instead of come up with the usual 20% down payment.
- Carry-Back loans
In the option of the seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically, this kind of second mortgage will have higher interest.
No matter how you gather your down payment, the thrill of reaching the goal of living in your own home will be just as sweet!
Need to talk about the best options for down payments? Give us a call at 714-970-9700.