Your Down Payment
Many buyers qualify for several different kinds of mortgages, but they can't afford a large down payment. Do you want to buy a new house, but don't know how to put together your down payment?
Tighten your belt and save. Turn your budget upside-down to discover extra money to save for your down payment. You also might enroll in an automatic savings plan to have a percentage of your pay automatically moved into savings. You could look into some big expenses in your spending history that you can do without, or reduce, at least temporarily. Here are a couple of examples: you might decide to move into less expensive housing, or skip a vacation.
Sell things you do not need and get a second job. Look for a second job. This can be exhausting, but the temporary difficulty can provide your down payment money. You can also seriously consider the possessions you really need and the things you can put up for sale. Multiple small items could add up to a fair amount at a garage or tag sale. Also, you can think about selling any investments you hold.
Borrow money from a retirement plan. Explore the specifics of your particular plan. Some homebuyers get down payment money by withdrawing what they need from Individual Retirement Accounts or borrowing from 401(k) plans. Make sure you comprehend the tax consequences, your obligation for repayment, and possible penalties for withdrawing early.
Request a gift from family. First-time homebuyers somtimes receive down payment assistance from gracious family members who may be eager to help them get into their first home. Your family members may be eager to help you reach the milestone of owning your first home.
Contact housing finance agencies. Provisional mortgage loans are extended to homebuyers in specific situations, such as low income homebuyers or homebuyers looking to improve homes in a particular neighborhood, among others. Working through a housing finance agency, you may get a below market interest rate, down payment help and other incentives. Housing finance agencies may help eligible buyers with a reduced rate of interest, help with your down payment, and offer other advantages. These non-profit agencies exist to build up home ownership in particular areas.
Explore no-down and low-down mortgage loan programs.
- Federal Housing Administration (FHA) mortgage loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low and moderate-income Americans qualify for mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA helps first-time buyers and others who may not be eligible for a typical loan by themselves, by providing mortgage insurance to private lenders.
Down payment amounts for FHA mortgages are smaller than those for typical mortgage loans, even though these mortgages come with average interest rates. The required down payment can go as low as 3 percent and the closing costs can be covered by the mortgage loan.
- VA loans
VA loans are guaranteed by the Department of Veterans Affairs. Service persons and veterans can benefit from a VA loan, which usually offers a reasonable interest rate, no down payment, and minimal closing costs. Although the VA does not actually finance the mortgage loans, it does issue a certificate of eligibility to qualify for a VA loan.
- Piggy-back loans
You may fund a down payment through a second mortgage that closes with the first. In most cases the first mortgage covers 80% of the purchase amount and the "piggyback" funds 10%. The homebuyer covers the remaining 10%, instead of come up with the typical 20% down payment.
- 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 through a traditional mortgage program and borrows the remainder from the seller. Typically you'll pay a somewhat higher rate with the loan financed by the seller.
The satisfaction will be the same, no matter how you manage to come up with the down payment. Your brand new home will be well worth it!
Need to talk about down payment options? Call us: (773) 774-9040 Ext 121.