Putting Together Your Down Payment
Lots of people who are looking to buy a new house can qualify for several different kinds of mortgages, but they can't afford a large down payment. Here are a few ways to put together your down payment
Slash the budget and build up savings. Be on the look-out for ways you can reduce your monthly expenses to set aside funds for a down payment. You could also try enrolling in an automatic savings plan to have a percentage of your payroll automatically deposited into your savings account. Some effective methods to save additional funds include moving into less expensive housing, and skipping a year's vacation.
Work more and sell things you don't need. Try to get an additional job. This can be exhausting, but the temporary trial can help you get your down payment. Additionally, you can make a comprehensive list of items you may be able to sell. Broken gold jewelry can bring a good price from local jewelry stores. Multiple small items could add up to a fair amount at a garage or tag sale. Also, you might want to look into selling any investments you own.
Borrow from retirement funds. Research the specifics for your individual plan. Some people get down payment money from withdrawing from their Individual Retirement Accounts or borrowing from their 401(k) plans. Be sure you know about any penalties, the effect this may have on your taxes, and repayment terms.
Ask for a gift from your family. First-time buyers are sometimes fortunate enough to receive down payment help from giving family members who are anxious to help them get into their own home. Your family members may be willing to help you reach the milestone of buying your own home.
Learn about housing finance agencies. These agencies offer special loan programs for moderate and low income homebuyers, buyers interested in sprucing up a house in a specific part of the city, and additional groups as defined by the agency. With the help of a housing finance agency, you may be given a below market interest rate, down payment assistance and other perks. Housing finance agencies may assist you with a reduced rate of interest, get you your down payment, and offer other benefits. The main goal of not-for-profit housing finance agencies is to boost home ownership in targeted places.
Find out about low-down and no-down mortgages.
- FHA mortgages
The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant role in assisting low to moderate-income individuals qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to get mortgages.
FHA provides mortgage insurance to private lenders, enabling new homebuyers who may not qualify for a traditional loan, to obtain financing.
Down payment requirements for FHA loans are smaller than those for traditional mortgages, even though these mortgages hold average interest rates. The down payment may go as low as three percent and the closing costs may be packaged in the mortgage loan.
- VA mortgages
VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a low fixed rate of interest, no down payment, and minimal closing costs. While it's true that the mortgage loans don't originate from the VA, the department certifies applicants by providing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes along with the first. Often the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. The borrower pays the remaining 10%, rather than having to put together the usual 20% down payment.
- Carry-Back loans
In a "carry back" mortgage, the seller agrees to lend you part of his home equity to help you with your down payment funds. You would finance the largest portion of the purchase price with a traditional lending institution and borrow the remainder 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 strategy you use to put together your down payment. Your brand new home will be your reward!
Need to talk about down payment options? Give us a call at 469-640-0400.