Your Down Payment
Many folks who are looking to purchase a new house qualify for various loan programs, but they don't have much to pay a down payment. Want to look into getting a new home, but don't know how you should put together your down payment?
Slash your budget and build up savings. Turn your budget upside-down to discover extra money to save for your down payment. You also might enroll in an automatic savings plan at your bank to automatically have a predetermined amount from your take-home pay transferred into your savings account. Some effective ways to save additional funds include moving into housing that is less expensive, and skipping a year's vacation.
Work more and sell items you don't need. Perhaps you can get a second job to get your down payment money. Additionally, you can put together a comprehensive list of items you may be able to sell. Unused gold jewelry can be sold at local jewelers. Multiple small items can add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you own.
Borrow funds from a retirement plan. Explore the specifics for your particular plan. Many people get down payment money from withdrawing from Individual Retirement Accounts or pulling funds out of their 401(k) programs. You will need to make sure you understand about any penalties, the way this will affect on taxes, and repayment obligation.
Ask for help from members of your family. Many homebuyers are sometimes lucky enough to get down payment assistance from gracious parents and other family members who are eager to help get them in their own home. Your family members may be pleased at the chance to help you reach the goal of buying your own home.
Research housing finance agencies. Provisional mortgage programs are extended to homebuyers in certain situations, such as low income buyers or homebuyers planning to improve homes in a targeted part of town, among others. With the help of a housing finance agency, you probably will get an interest rate that is below market, down payment help and other benefits. These types of agencies can help eligible homebuyers with a reduced interest rate, get you your down payment, and offer other advantages. The principal goal of non-profit housing finance agencies is promoting the purchase of homes in certain places.
Explore no-down and low-down mortgages.
- FHA mortgages
The Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in helping low to moderate-income families qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to qualify for mortgages.
FHA provides mortgage insurance to private lenders, enabling buyers who will not qualify for a conventional loan, to receive home financing.
Interest rates for an FHA loan generally feature the market interest rate, while the down payment amounts for an FHA mortgage will be lower than those of conventional loans. The required down payment may be as low as 3 percent while the closing costs can be financed in the mortgage loan.
- VA mortgage loans
With a guarantee from the Department of Veterans Affairs, a VA loan qualifies service people and veterans. This particular loan does not require a down payment, has reduced closing costs, and provides the benefit of a competitive interest rate. Even though the VA doesn't actually provide the mortgages, it does issue a certificate of eligibility to qualify for a VA mortgage.
- Piggy-back loans
You may fund your down payment with a second mortgage that closes at the same time as the first. Most of the time, the piggyback loan takes care of 10 percent of the purchase price, and the first mortgage finances 80 percent. 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" agreement, the seller commits to loan you a piece of his home equity to help you get your down payment money. In this scenario, you would finance the majority of the purchase price with a traditional lender and borrow the remaining amount from the seller. Often, this kind of second mortgage will have a higher rate of interest.
The feeling of accomplishment will be the same, no matter which approach you use to pull together the down payment. Your new home will be your reward!
Need to talk about your down payment? Call us: 562 320-0510.