Your Down Payment
Many borrowers qualify for a mortgage loan, but they don't have a lot of cash to pay the standard down payment. Want to buy a new home, but don't know how to put together your down payment?
Cut expenses and save. Look for ways to trim your expenses to save toward a down payment. There are bank programs through which a portion of your take-home pay is automatically transferred into a savings account each pay period. Some effective approaches to build up funds include moving into less expensive housing, and skipping your vacation for a year or two.
Sell things you don't really need and find a second job. Look for an additional job. This can be exhausting, but the temporary trial can help you get your down payment. You can also get serious about the possessions you really need and the items you may be able to put up for sale. Multiple small items may add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you own.
Borrow money from your retirement plan. Research the details of your individual plan. It is possible to pull out funds from a 401(k) for you down payment or withdraw from an Individual Retirement Account. You will want to be sure you are clear about any penalties, the way this could affect on your income taxes, and repayment obligation.
Ask for assistance from members of your family. First-time buyers are often fortunate enough to get help with their down payment assistance from gracious family members who may be eager to help get them in their first home. Your family members may be willing to help you reach the milestone of owning your first home.
Research housing finance agencies. Provisional mortgate loan programs are offered to buyers in certain situations, such as low income purchasers or homebuyers planning to remodel homes in a specific area, among others. With the help of 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 may help eligible buyers with a reduced rate of interest, get you your down payment, and offer other advantages. The primary goal of not-for-profit housing finance agencies is to promote residence ownership in particular places.
Learn about low-down and no-down mortgage loan programs.
- FHA 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 and moderate-income families qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who need to qualify for mortgage loans.
FHA offers mortgage insurance to the private lenders, enabling new homebuyers who will not be eligible for a conventional loan, to obtain a mortgage.
Interest rates with an FHA loan are typically the current interest rate, while the down payment with an FHA loan will be lower than those of conventional loans. The down payment can go as low as three percent and the closing costs could be financed in the mortgage loan.
- VA loans
VA loans are backed by the Department of Veterans Affairs. Veterens and service people can benefit from a VA loan, which typically offers a low fixed interest rate, no down payment, and minimal closing costs. Even though the VA doesn't actually issue the mortgage loans, it does issue a certificate of eligibility to apply for a VA loan.
- Piggy-back loans
You may finance your down payment with 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" is for 10%. In contrast to the usual 20 percent down payment, the buyer will just have to cover the remaining 10 percent.
- Carry-Back loans
In a "carry back" agreement, the seller agrees to loan you some of his home equity to help you with your down payment funds. The buyer finances most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you'll pay a somewhat higher rate with the loan financed by the seller.
No matter how you gather your down payment, the satisfaction of reaching the goal of owning your own home will be just as sweet!
Need to talk about your down payment? Call us at 503-657-3311.