Putting Together Your Down Payment
Many buyers qualify for several different kinds of mortgages, but they don't have much to put up the standard down payment. Do you want to look into getting a new home, but don't know how to get together a down payment?
Tighten your belt and save. Scrutinize your budget to find extra money to go toward your down payment. You also might enroll in an automatic savings plan to have a portion of your pay automatically deposited into savings. You might look into some big expenses in your budget that you can give up, or reduce, at least temporarily. For example, you may decide to move into less expensive housing, or skip a family vacation.
Work a second job and sell things you do not need. Maybe you can get an additional job and save your earnings. Additionally, you can put together a comprehensive inventory of items you can sell. Unused gold jewelry can bring a good price from local jewelry stores. A closetful of small things could add up to a fair amount at a garage or tag sale. Also, you can look into selling any investments you hold.
Borrow funds from a retirement plan. Check the parameters of your retirement plan. It is possible to borrow funds from a 401(k) for a down payment or make a withdrawal from an IRA. Be sure you know about any penalties, the effect this may have on your taxes, and repayment terms.
Ask for help from generous family members. First-time homebuyers somtimes get help with their down payment assistance from giving parents and other family members who are eager to help get them in their first home. Your family members may be inclined to help you reach the goal of buying your own home.
Contact housing finance agencies. Provisional mortgate loan programs are extended to homebuyers in certain circumstances, like low income buyers or future homeowners looking to renovating homes in a certain area, among others. Working with this type of agency, you can receive a below market interest rate, down payment assistance and other benefits. These types of agencies may help eligible homebuyers with a reduced rate of interest, get you your down payment, and provide other benefits. These non-profit programs to boost community in certain neighborhoods.
Explore no-down and low-down mortgages.
- FHA loans
The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a significant part in assisting low to moderate-income Americans qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages.
FHA offers mortgage insurance to private lenders, making the buyers eligible for a mortgage.
Interest rates with an FHA loan normally feature the current interest rate, while the down payment with an FHA mortgage will be below those of conventional loans. Closing costs can be financed within the mortgage, and your down payment may be as low as 3 percent of the purchase price.
- VA mortgage loans
Guaranteed by the Department of Veterans Affairs, a VA loan is offered to veterens and service people. This particular loan requires no down payment, has limited closing costs, and offers a competitive interest rate. While the loans don't originate from the VA, the department verfifies applicants by providing eligibility certificates.
- Piggy-back loans
You may fund a down payment through a second mortgage that closes at the same time as the first. Often the first mortgage is for 80% of the cost of the home and the "piggyback" funds 10%. Rather than the usual 20 percent down payment, the homebuyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
We a seller carries back a second mortgage, the you borrow part of the seller's home equity.. The buyer finances the highest percentage of the purchase price with a traditional mortgage program and finances the remaining funds with the seller. Typically you will pay a somewhat higher rate with the loan financed by the seller.
No matter how you gather down payment funds, the satisfaction of reaching the goal of living in your own home will be just as great!
Want to discuss the best options for down payments? Call us: (773) 774-9040 Ext 121.