Your Down Payment
Lots of borrowers can easily qualify for several different kinds of mortgages, but they don't have much to put up a down payment. Want to look into getting a new home, but aren't sure how to get together your down payment?
Tighten your belt and save. Scrutinize the budget to find extra money to go toward your down payment. You may also decide to enroll in an automatic savings plan to automatically have a set amount from your take-home pay transferred into savings. Some effective strategies to save additional funds include moving into housing that is less expensive, and staying home for your family vacation this year.
Work more and sell items you don't need. Maybe you can get an additional job to get your down payment money. In addition, you can make an exhaustive list of things you may be able to sell. Broken gold jewelry can be sold at local jewelry stores. Multiple small items may add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you hold.
Borrow from retirement funds. Investigate the provisions of your particular plan. It is possible to borrow money from a 401(k) plan for a down payment or withdraw from an Individual Retirement Account. Make sure you understand about any penalties, the effect this could have on your income taxes, and repayment obligation.
Ask for help from generous members of your family. First-time buyers somtimes receive help with their down payment assistance from thoughtful parents and other family members who may be prepared to help get them in their first home. Your family members may be willing to help you reach the milestone of having your first home.
Learn about housing finance agencies. These agencies offer provisional mortgage loans for low and moderate-income buyers, buyers with an interest in rehabilitating a home in a particular area, and additional specific kinds of buyers as defined by each finance agency. With the help of this kind of agency, you probably will receive a below market interest rate, down payment help and other incentives. Housing finance agencies may assist you with a reduced interest rate, help with your down payment, and provide other assistance. These non-profit programs to build up home ownership in particular neighborhoods.
Explore no-down and low-down mortgages.
- Federal Housing Administration (FHA) mortgages
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 Americans 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 assists first-time buyers and others who may not be able to qualify for a typical loan on their own, by providing mortgage insurance to private lenders.
Down payment sums for FHA mortgages are less than those for typical mortgages, even though these loans hold average rates of interest. The required down payment can go as low as three percent and the closing costs could be covered by the mortgage.
- VA mortgages
With a guarantee from the Department of Veterans Affairs, a VA loan assists service people and veterans. This special loan does not require a down payment, has mimimal closing costs, and offers a competitive interest rate. Even though the mortgages don't originate from the VA, the office certifies borrowers by providing eligibility certificates.
- Piggy-back loans
You may finance a down payment using a second mortgage that closes along with the first. Most of the time, the piggyback loan takes care of 10 percent of the home's price, while the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
In the case of the seller "carrying back a second mortgage," the seller loans you part of his or her equity. You would borrow the majority of the purchase price from a traditional mortgage lending institution and finance the remaining amount with the seller. Generally, this form of second mortgage has a higher rate of interest.
No matter how you gather your down payment, the satisfaction of living in your own home will be just as great!
Need to talk about down payments? Call us: (773) 774-9040 Ext 121.