Your Down Payment
Lots of buyers qualify for several different kinds of mortgages, but they don't have a lot of cash to pay the standard down payment. Start here
Slash your budget and build up savings. Scrutinize your budget to find extra money to go toward your down payment. You could also decide to enroll in an automatic savings plan to have a percentage of your payroll automatically transferred into your savings account. You would be wise to look into some big expenses in your budget that you can do without, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or skip a vacation.
Sell items you do not need and find a second job. Perhaps you can get an additional job and save your earnings. Additionally, you can make a comprehensive list of things you can sell. Unworn gold jewelry can be sold at local jewelry stores. Maybe you have collectibles you can sell at an auction website, or household items for a garage or tag sale. Also, you can think about selling any investments you hold.
Tap into retirement funds. Check the provisions of your specific program. It is possible to borrow money from a 401(k) plan for you down payment or withdraw from an IRA. Be sure you understand the tax ramifications, your obligation for repayment, and any early withdrawal penalties.
Ask for help from family members. First-time homebuyers somtimes get help with their down payment assistance from gracious parents and other family members who are able to help get them in their first home. Your family members may be pleased to help you reach the milestone of owning your first home.
Learn about housing finance agencies. Provisional mortgage programs are provided to buyers in specific circumstances, such as low income purchasers or future homeowners planning to remodel homes in a certain area, among others. Financing through a housing finance agency, you can be given an interest rate that is below market, down payment assistance and other incentives. These kinds of agencies can help you with a reduced interest rate, get you your down payment, and provide other benefits. The primary mission of non-profit housing finance agencies is promoting home ownership in targeted areas.
Research no-down and low-down mortgages.
- 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 a critical role in assisting low and moderate-income individuals get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting home financing.
FHA provides mortgage insurance to private lenders, enabling buyers who may not be eligible for a traditional mortgage loan, to obtain financing.
Down payment sums for FHA mortgages are below those with conventional mortgage loans, even though these mortgages have current rates of interest. The down payment may be as low as three percent and the closing costs can be packaged in the mortgage.
- VA loans
With a guarantee from the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This special loan does not require a down payment, has limited closing costs, and offers a competitive rate of interest. While it's true that the mortgages don't originate from the VA, the office verfifies borrowers by providing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes at the same time as the first. In most cases the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. The homebuyer pays the remaining 10%, instead of putting the usual 20% down payment.
- Carry-Back loans
In a "carry back" mortgage, the seller agrees to loan you a piece of his own equity to help you get your down payment funds. The buyer funds the highest percentage of the purchase price through a traditional mortgage program and finances the remaining funds with the seller. Usually you'll pay a somewhat higher interest rate on the loan financed by the seller.
No matter how you gather your down payment, the thrill of reaching the goal of owning your own home will be just as great!
Need to talk about your down payment? Call us at 954.920.9799.