Your Down Payment
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Many borrowers 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 to get started
Slash your budget and build up savings. Scrutinize the budget to uncover extra money to save for your down payment. You might also try enrolling in an automatic savings plan at your bank to have a portion of your pay automatically moved into savings. Some practical approaches to put together funds include moving into less expensive housing, and skipping your vacation for a year or two.
Sell items you do not need and get a second job. Look for an additional job. This can be rough, but the temporary trial can provide your down payment money. Additionally, you can make an exhaustive inventory of things you may be able to sell. Unused gold jewelry can be sold at local jewelers. Maybe you have desirable items you can put up for sale on an auction website, or quality household goods for a garage or tag sale. You might also explore what any investments you own may bring if sold.
Borrow your down payment from your retirement plan. Check the parameters of your retirement plan. Many homebuyers get down payment money by withdrawing funds from their Individual Retirement Accounts or pulling funds out of 401(k) plans. Be sure to learn about the tax ramifications, repayment terms, and early withdrawal penalties.
Request a gift from your family. First-time buyers sometimes get help with their down payment help from gracious family members who may be prepared to help get them in their own home. Your family members may be pleased to help you reach the milestone of owning your first home.
Contact housing finance agencies. These types of agencies provide provisional mortgage programs for low and moderate-income buyers, buyers with an interest in sprucing up a house within a targeted part of the city, and additional groups as defined by the finance agency. Working through a housing finance agency, you probably will be given an interest rate that is below market, down payment assistance and other advantages. Housing finance agencies can assist eligible buyers with a reduced rate of interest, help with your down payment, and provide other advantages. These non-profit agencies to promote home ownership in certain areas.
Explore no-down and low-down mortgages.
- Federal Housing Administration (FHA) mortgage loans
The Federal Housing Administration (FHA), which is inside the U.S. Department of Housing and Urban Development (HUD), plays a vital part in aiding low and moderate-income buyers qualify for mortgage loans. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) aids individuals who wish to get mortgage loans. FHA provides mortgage insurance to the private lenders, ensuring the buyers are eligible for a mortgage. Interest rates with an FHA mortgage are generally the going interest rate, while the down payment requirements for an FHA loan will be lower than those of conventional loans. Closing costs can be financed within the mortgage, while your down payment can be as low as 3 percent of the purchase price.
- VA mortgages
VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people are eligible for a VA loan, which generally offers a reasonable fixed interest rate, no down payment, and limited closing costs. Although the loans are not actually issued by the VA, the department verifies borrowers by providing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that you close along with the first. Generally the piggyback loan takes care of 10 percent of the home's amount, and the first mortgage covers 80 percent. The borrower covers the remaining 10%, rather than come up with the usual 20% down payment.
- Carry-Back loans
In a "carry back" mortgage, the seller commits to lend you a piece of his own equity to help you get your down payment money. In this scenario, you would borrow the largest portion of the purchase price from a traditional lending institution and borrow the remainder from the seller. Usually you will pay a slightly higher rate on the loan from the seller.
The feeling of accomplishment will be the same, no matter how you manage to get together the down payment. Your brand new home will be your reward!
Want to discuss down payments? Give us a call: 352-369-4200.