Your Down Payment
Lots of people who are looking to buy a new house can easily qualify for a mortgage loan, but they can't afford a large down payment. Below are a few straightforward methods that will help you get together your down payment
Tighten your belt and save. Look for ways to reduce your monthly expenses to put away money for a down payment. You might also decide to enroll in an automatic savings plan at your bank to have a portion of your payroll automatically moved into a savings account. You could look into some big expenses in your budget that you can give up, or reduce, at least temporarily. Here are a couple of examples: you may decide to move into less expensive housing, or stay close to home for your family vacation.
Work a second job and sell things you do not need. Look for an additional job. This can be rough, but the temporary difficulty can help you get your down payment. You can also get creative about the items you may be able to put up for sale. Multiple small items could add up to a nice sum at a garage or tag sale. You might also explore what any investments you own will bring if sold.
Tap into your retirement funds. Check the provisions of your retirement program. You can pull out funds from a 401(k) for a down payment or make a withdrawal from an Individual Retirement Account. Make sure you know about any penalties, the way this could affect on income taxes, and repayment obligation.
Ask for assistance from family members. Many buyers are often fortunate enough to get down payment help from caring parents and other family members who may be eager to help them get into their own home. Your family members may be pleased at the chance to help you reach the goal of buying your first home.
Research housing finance agencies. These types of agencies offer provisional mortgate loan programs- for moderate and low income borrowers, buyers interested in rehabilitating a residence in a specific part of the city, and other particular kinds of buyers as defined by each agency. With the help of this type of agency, you can get an interest rate that is below market, down payment help and other perks. These types of agencies may help eligible homebuyers with a lower rate of interest, help with your down payment, and provide other assistance. The principal mission of non-profit housing finance agencies is build up the purchase of homes in specific parts of the city.
Find out about low-down and no-down mortgage loans.
- Federal Housing Administration (FHA) loans
The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays an important role in helping low and moderate-income families qualify for mortgages. Part of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA aids first-time buyers and others who would not be eligible for a traditional loan by themselves, by providing mortgage insurance to the private lenders.
Interest rates for an FHA loan usually feature the going interest rate, but the down payment requirements for an FHA loan will be lower than those of conventional loans. Closing costs can be financed in the mortgage, and the down payment could be as low as 3 percent of the total.
- VA mortgages
VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people can receive a VA loan, which typically offers a low fixed interest rate, no down payment, and minimal closing costs. Although the mortgage loans don't originate from the VA, the department certifies borrowers by providing eligibility certificates.
- Piggy-back loans
You can fund a down payment with a second mortgage that closes along with the first. Generally the piggyback loan takes care of 10 percent of the home's price, and the first mortgage covers 80 percent. In contrast to the usual 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.
- Carry-Back loans
In a "carry back" mortgage, the seller commits to lend you part of his home equity to help you get your down payment funds. In this scenario, you would finance the largest portion of the purchase price with a traditional lending institution and finance the remainder with the seller. Typically, this form of second mortgage will have a higher rate of interest.
The feeling of accomplishment will be the same, no matter which approach you use to come up with the down payment. Your brand new home will be worth it!
Want to discuss down payments? Give us a call at (916) 399-5500.