Your Down Payment
Lots of buyers can easily qualify for a loan, but they can't afford a large down payment. Want to look into getting a new home, but don't know how to get together a down payment?
Tighten your belt and save. Be on the look-out for ways you can reduce your expenditures to put away money for a down payment. You could also decide to enroll in an automatic savings plan to automatically have a set amount from your take-home pay transferred into your savings account. You might look into some big expenses in your budget that you can do without, or reduce, at least temporarily. Here are a couple of examples: you might move into less expensive housing, or skip a family vacation.
Sell items you do not need and find a second job. Perhaps you can get an additional job to get your down payment money. You can also get creative about the items you may be able to put up for sale. Multiple small items might add up to a nice sum at a garage or tag sale. You can also research what your investments may sell for.
Borrow your down payment from a retirement plan. Research the details of your particular plan. It is possible to take out funds from a 401(k) for a down payment or withdraw from an IRA. You will need to be sure you understand about any penalties, the effect this could have on your income taxes, and repayment obligation.
Ask for assistance from family members. First-time homebuyers somtimes receive help with their down payment assistance from thoughtful parents and other family members who may be anxious 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.
Contact housing finance agencies. These types of agencies extend special mortgage loans to low and moderate-income buyers, buyers interested in remodeling a house within a particular area, and additional specific kinds of buyers as defined by the agency. With the help of this type of agency, you probably will get a below market interest rate, down payment help and other advantages. Housing finance agencies may assist you with a reduced rate of interest, help with your down payment, and offer other advantages. The principal goal of not-for-profit housing finance agencies is promoting home ownership in particular places.
Find out about low-down and no-down mortgage loans.
- Federal Housing Administration (FHA) loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in helping low and moderate-income buyers get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals in getting mortgages.
FHA offers mortgage insurance to the private lenders, enabling new homebuyers who may not be eligible for a conventional mortgage, to get financing.
Down payment totals for FHA mortgages are smaller than those for typical mortgages, even though these loans have current rates of interest. The down payment may be as low as three percent and the closing costs might be packaged in the mortgage loan.
- VA mortgages
VA loans are guaranteed by the U.S. Department of Veterans Affairs. Service persons and veterans can receive a VA loan, which generally offers a competitive rate of interest, no down payment, and minimal closing costs. Even though the VA doesn't finance the loans, it does issue a certificate of eligibility to apply for a VA mortgage.
- Piggy-back loans
You can fund your down payment with a second mortgage that closes at the same time as the first. Usually the first mortgage is for 80% of the purchase price and the "piggyback" is for 10%. Rather than the usual 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
In the option of a seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. You would finance the majority of the purchase price with a traditional mortgage lender and borrow the remainder from the seller. Usually you will pay a somewhat higher interest rate with the loan financed by the seller.
The satisfaction will be the same, no matter how you manage to put together the down payment. Your brand new home will be your reward!
Need to talk about your down payment? Give us a call at (773) 774-9040 Ext 121.