Your Down Payment
Many borrowers qualify for a mortgage loan, but they can't afford a large down payment. Here are a few tips:
Cut expenses and save. Be on the look-out for ways to trim your monthly expenditures to set aside funds for a down payment. There are bank programs in which some of your take-home pay is automatically placed into savings each pay period. You might look into some big expenses in your budget that you can do without, or reduce, at least temporarily. For example, you might decide to move into less expensive housing, or skip a family vacation.
Work a second job and sell items you do not need. Perhaps you can find a second job and save your earnings. You can also seriously consider the possessions you actually need and the items you can put up for sale. Multiple small things might add up to a nice sum at a garage or tag sale. Also, you might want to think about selling any investments you hold.
Tap into retirement funds. Explore the details of your individual plan. Many people get down payment money from withdrawing funds from IRAs or getting funds out of 401(k) programs. Be sure to find out about the tax consequences, repayment terms, and early withdrawal penalties.
Ask for help from generous family members. Many homebuyers somtimes get down payment help from thoughtful family members who are anxious to help them get into their first home. Your family members may be eager to help you reach the goal of buying your first home.
Research housing finance agencies. These types of agencies provide special loan programs for low and moderate-income homebuyers, buyers interested in sprucing up a residence in a specific part of the city, and additional certain types of buyers as defined by the finance agency. With the help of a housing finance agency, you may be given a below market interest rate, down payment assistance and other advantages. These types of agencies can help you with a lower rate of interest, help with your down payment, and provide other benefits. These non-profit programs were established to boost the value of homes in certain neighborhoods.
Explore no-down and low-down mortgage loans.
- Federal Housing Administration (FHA) loans
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 and moderate-income individuals qualify for mortgage loans. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA provides mortgage insurance to the private lenders, enabling new homebuyers who will not be eligible for a traditional loan, to receive a mortgage.
Interest rates with an FHA mortgage normally feature the going interest rate, but the down payment requirements with an FHA loan are lower than those of conventional loans. Closing costs may be included in the mortgage, and your down payment may be as low as 3 percent of the purchase price.
- VA mortgages
With a guarantee from the Department of Veterans Affairs, a VA loan assists veterens and service people. This special loan requires no down payment, has reduced closing costs, and provides the benefit of a competitive interest rate. Although the loans don't originate from the VA, the office certifies borrowers by providing eligibility certificates.
- Piggy-back loans
You can fund a down payment through a second mortgage that closes along with the first. Often the first mortgage covers 80% of the cost of the home and the "piggyback" funds 10%. In contrast to the usual 20 percent down payment, the buyer just has to pull together the remaining 10 percent.
- Carry-Back loans
In a "carry back" agreement, the seller commits to lend you a portion of his own equity to help you get your down payment funds. You would borrow the largest portion of the purchase price from a traditional mortgage lending institution and finance the remaining amount with the seller. Typically, this type of second mortgage has higher interest.
The feeling of accomplishment will be the same, no matter which strategy you use to come up with your down payment. Your brand new home will be well worth it!
Need to talk about your down payment? Call us at 706-860-5514.