Building Your Down Payment
Lots of borrowers qualify for various loan programs, but they don't have much to put up a down payment. Below are a few ways to get together a down payment
Reduce expenses and save. Be on the look-out for ways you can reduce your monthly expenses to put away money for a down payment. There are bank programs through which a specific portion of your take-home pay is automatically deposited into savings every pay period. Some effective strategies to put together funds include moving into a residence that is less expensive, and skipping your family vacation for a year or two.
Sell items you don't really need and find a part-time job. Perhaps you can find an additional job and save your earnings. You can also get serious about the possessions you actually need and the things you could be able to sell. A closetful of small things might add up to a nice sum at a garage or tag sale. You can also look into what any investments you hold will bring if sold.
Borrow from retirement funds. Explore the details of your individual plan. You can borrow money from a 401(k) for a down payment or withdraw from an Individual Retirement Account. Be sure to find out about the tax ramifications, your obligation for repaying funds, and possible early withdrawal penalties.
Ask for help from members of your family. Many homebuyers somtimes get help with their down payment assistance from caring parents and other family members who may be anxious to help them get into their first home. Your family members may be pleased to help you reach the goal of having your own home.
Research housing finance agencies. Provisional loan programs are extended to buyers in certain circumstances, like low income buyers or homebuyers looking to remodel houses in a targeted part of town, among others. With the help of a housing finance agency, you probably will receive a below market interest rate, down payment help and other perks. These kinds of agencies can help you with a reduced rate of interest, get you your down payment, and provide other benefits. The main purpose of not-for-profit housing finance agencies is to boost the purchase of homes in particular places.
Find out about low-down and no-down mortgage loan programs.
- 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 part in assisting low to moderate-income families get mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA assists first-time homebuyers and others who would not be eligible for a typical mortgage by themselves, by providing mortgage insurance to private lenders.
Interest rates for an FHA mortgage typically feature the market interest rate, while the down payment for an FHA mortgage will be less than those of conventional loans. The required down payment may go as low as 3 percent while the closing costs might be financed in the mortgage.
- VA mortgages
With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This specialized loan does not require a down payment, has reduced closing costs, and provides a competitive rate of interest. Although the loans don't originate from the VA, the department verfifies applicants by issuing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close along with the first. Most of the time, the first mortgage is for 80% of the purchase amount and the "piggyback" funds 10%. Instead of the traditional 20 percent down payment, the homebuyer will just have to pull together 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 get your down payment money. The buyer funds most of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Usually this form of second mortgage has higher interest.
No matter how you gather your down payment funds, the satisfaction of owning your own home will be just as sweet!
Need to talk about down payments? Call us at (773) 774-9040 Ext 121.