Putting Together Your Down Payment
Lots of buyers qualify for several different kinds of mortgages, but they can't afford a large down payment. Want to look into getting a new home, but aren't sure how you should put together a down payment?
Slash the budget and build up savings. Turn your budget inside out to discover extra money to save for your down payment. There are bank programs through which a portion of your paycheck is automatically placed into a savings account each pay period. You could look into some big expenses in your spending history that you can do without, or trim, at least temporarily. For example, you may decide to move into less expensive housing, or skip a family vacation.
Sell things you do not need and get a second job. Perhaps you can get a second job to get your down payment money. You can also get creative about the items you can sell. A closetful of small things may add up to a nice sum at a garage or tag sale. You can also look into what your investments will bring if sold.
Tap into your retirement funds. Explore the details for your particular plan. Many people get down payment money by withdrawing what they need from their IRAs or borrowing from 401(k) programs. Make sure you comprehend the tax consequences, repayment terms, and possible penalties for withdrawing early.
Request a generous gift from your family. First-time buyers are often fortunate enough to receive help with their down payment assistance from gracious family members who are able to help get them in their first home. Your family members may be inclined to help you reach the goal of having your own home.
Contact housing finance agencies. Provisional mortgage programs are provided to buyers in specific circumstances, such as low income homebuyers or buyers planning to improve homes in a particular place, among others. Working through a housing finance agency, you may be given an interest rate that is below market, down payment help and other benefits. Housing finance agencies may assist eligible homebuyers with a lower interest rate, get you your down payment, and offer other assistance. These non-profit programs exist to boost the value of homes in particular neighborhoods.
Learn about low-down and no-down mortgage loan programs.
- Federal Housing Administration (FHA) loans
The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays an important part in aiding low and moderate-income individuals get mortgage loans. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids homebuyers in getting mortgages.
FHA helps first-time homebuyers and others who may not be eligible for a conventional mortgage loan by themselves, by providing mortgage insurance to lenders.
Down payment totals for FHA mortgages are below those for conventional mortgages, although these loans hold average rates of interest. Closing costs can be included in the mortgage, and your down payment could be as low as 3% of the purchase price.
- VA mortgage loans
Guaranteed by the Department of Veterans Affairs, a VA loan qualifies veterens and service people. This special loan does not require a down payment, has limited closing costs, and provides a competitive rate of interest. While it's true that the mortgage loans are not actually issued by the VA, the office certifies borrowers by issuing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close with the first. Often the first mortgage is for 80% of the purchase price and the "piggyback" funds 10%. Rather than the traditional 20 percent down payment, the buyer will just have to pull together the remaining 10 percent.
- Carry-Back loans
In the option of a seller "carrying back a second mortgage," the you borrow a portion of the seller's home equity.. In this scenario, you would finance the largest portion of the purchase price with a traditional lending institution and borrow the remainder from the seller. Usually this form of second mortgage will have higher interest.
The feeling of accomplishment will be the same, no matter how you manage to come up with the down payment. Your brand new home will be your reward!
Want to discuss the best options for down payments? Give us a call at (916) 399-5500.