Your Down Payment
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Many borrowers can easily qualify for a mortgage loan, but they don't have a lot of cash to put up the standard down payment. We have a few ideas
Slash your budget and build up savings. Be on the look-out for ways you can reduce your expenditures to set aside money for a down payment. There are bank programs through which a specific portion of your take-home pay is automatically placed into savings each pay period. Some effective ways to build up funds include moving into less expensive housing, and skipping your family vacation for a year or two.
Sell things you do not really need and get a part-time job. Perhaps you can find a second job and save your earnings. In addition, you can put together an exhaustive list of items you can sell. Broken gold jewelry can be sold at local jewelers. You may own collectibles you can put up for sale on an auction website, or household items for a garage or tag sale. You could also explore what any investments you have could bring if sold.
Borrow money from your retirement plan. Check the provisions of your specific program. Some homebuyers get down payment money by withdrawing from IRAs or getting money out of 401(k) programs. Be sure you are clear about any penalties, the effect this could have on your income taxes, and repayment terms.
Request a generous gift from your family. First-time homebuyers are sometimes lucky enough to get help with their down payment help from gracious family members who are eager to help get them in their first home. Your family members may be eager to help you reach the milestone of buying your first home.
Research housing finance agencies. Provisional mortgage programs are given to homebuyers in specific situations, such as low income purchasers or buyers planning to remodel houses in a targeted area, among others. Working with a housing finance agency, you probably will be given an interest rate that is below market, down payment help and other advantages. Housing finance agencies can assist eligible buyers with a reduced rate of interest, help with your down payment, and offer other benefits. These non-profit agencies exist to boost the value of homes in specific areas.
Find out about low-down and no-down mortgage loan programs.
- FHA mortgages
The Federal Housing Administration (FHA), which is part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in assisting low and moderate-income individuals get mortgages. An office of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) helps individuals get
FHA offers mortgage insurance to the private lenders, enabling buyers who might not be eligible for a traditional mortgage, to get a mortgage.
Interest rates with an FHA loan are normally the market interest rate, but the down payment for an FHA mortgage will be lower than those of conventional loans. The required down payment may go as low as 3 percent while the closing costs may be included in the mortgage.
- VA mortgage loans
Guaranteed by the Department of Veterans Affairs, a VA loan is offered to service people and veterans. This special loan requires no down payment, has limited closing costs, and offers a competitive rate of interest. Even though the mortgages don't originate from the VA, the office verifies applicants by providing eligibility certificates.
- Piggy-back loans
You may finance your down payment through 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 covers 80 percent. The borrower pays the remaining 10%, instead of having to pull together the typical 20% down payment.
- Carry-Back loans
In a "carry back" situation, the seller agrees to loan you part of his home equity to help you get your down payment funds. In this scenario, you would borrow the largest portion of the purchase price from a traditional lender and finance the remaining amount with the seller. Usually this type of second mortgage will have a higher rate of interest.
No matter how you gather your down payment, the satisfaction of reaching the goal of owning your own home will be just as great!
Want to discuss down payments? Give us a call at 8137665149.