Your Down Payment
Lots of folks who are looking to buy a new house qualify for several different kinds of mortgages, but they don't have a lot of money to put up a down payment. Here's where you start
Reduce expenses and save. Scrutinize the budget to find ways you can cut expenses to go toward your down payment. There are bank programs in which a specific portion of your paycheck is automatically transferred into a savings account each pay period. Some effective strategies to build up funds include moving into less expensive housing, and skipping your family vacation for a year or two.
Work more and sell items you don't need. Look for a second job. This can be rough, but the temporary difficulty can help you get your down payment. Additionally, you can make a comprehensive list of items you can sell. Unworn gold jewelry can bring a good amount from local jewelers. A closetful of small things can add up to a fair amount at a garage or tag sale. You might also look into what your investments will bring if sold.
Borrow from retirement funds. Check the parameters of your particular program. Many people get down payment money by withdrawing what they need from their IRAs or borrowing from 401(k) programs. Be sure to learn about the tax ramifications, your obligation for repaying the money, and any early withdrawal penalties.
Request a generous gift from family. First-time homebuyers somtimes receive down payment assistance from thoughtful parents and other 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 having your own home.
Contact housing finance agencies. Provisional mortgate loan programs are given to homebuyers in certain situations, like low income purchasers or future homeowners looking to remodel homes in a targeted part of town, among others. With the help of a housing finance agency, you probably will be given an interest rate that is below market, down payment assistance and other advantages. These kinds of agencies may assist eligible buyers with a reduced rate of interest, help with your down payment, and offer other assistance. These non-profit programs exist to promote home ownership in certain neighborhoods.
Research no-down and low-down mortgage loan programs.
- 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 role in aiding low and moderate-income buyers get mortgage loans. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA offers mortgage insurance to private lenders, making the buyers eligible for a loan.
Down payment requirements for FHA mortgages are below those of traditional mortgages, even though these mortgages hold average rates of interest. The required down payment may go as low as 3 percent and the closing costs may be packaged in the mortgage loan.
- 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 rate of interest. Even though the mortgage loans don't originate from the VA, the department certifies applicants by issuing eligibility certificates.
- Piggy-back loans
You can finance a down payment with a second mortgage that closes at the same time as the first. Usually the piggyback loan takes care of 10 percent of the home's amount, and the first mortgage finances 80 percent. Rather than the usual 20 percent down payment, the homebuyer will just have to cover the remaining 10 percent.
- Carry-Back loans
In a "carry back" situation, the seller commits to loan you some of his own equity to assist you with your down payment money. You would finance the largest portion of the purchase price with a traditional lending institution and borrow the remainder from the seller. Often, this kind of second mortgage has a higher rate of interest.
No matter how you gather your down payment, the satisfaction of reaching the goal of living in your own home will be just as sweet!
Need to talk about your down payment? Give us a call at (916) 399-5500.