Your Down Payment
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Lots of borrowers can easily qualify for various loan programs, but they can't afford a large down payment. Below are a few ways to get together a down payment
Slash the budget and build up savings. Scrutinize the budget to find ways you can cut expenses to go toward your down payment. You also could enroll in an automatic savings plan to automatically have a specific portion of your take-home pay transferred into a savings account. Some practical ways to build up funds include moving into a residence that is less expensive, and skipping a year's vacation.
Sell items you do not really need and get a part-time job. Look for an additional job. This can be rough, but the temporary trial can help you get your down payment. Additionally, you can put together an exhaustive list of things you can sell. Unworn gold jewelry can be sold at local jewelers. Maybe you own desirable items you can put up for sale on an online auction, or quality household goods for a garage or tag sale. Also, you might want to consider selling any investments you hold.
Borrow your down payment from your retirement plan. Research the details for your particular plan. Some homebuyers get down payment money from withdrawing what they need from their IRAs or borrowing from 401(k) programs. Make sure you understand the tax ramifications, your obligation for repaying the money, and any early withdrawal penalties.
Ask for help from generous members of your family. First-time homebuyers are sometimes lucky enough to get help with their down payment help from giving parents and other family members who may be anxious to help get them in their own home. Your family members may be willing to help you reach the milestone of owning your own home.
Research housing finance agencies. Special mortgage loans are provided to homebuyers in certain situations, like low income homebuyers or buyers looking to remodel homes in a particular place, among others. Working through a housing finance agency, you may get a below market interest rate, down payment assistance and other perks. These kinds of agencies can assist you with a reduced interest rate, help with your down payment, and provide other assistance. The main purpose of non-profit housing finance agencies is to promote residence ownership in targeted places.
Learn about low-down and no-down mortgage loans.
- Federal Housing Administration (FHA) loans
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays an important role in aiding low to moderate-income families qualify for mortgages. Part of the U.S. Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who wish to get home financing. FHA provides mortgage insurance to the private lenders, ensuring the buyers are eligible for a loan. Down payment requirements for FHA loans are lower than those for conventional mortgages, although these mortgages come with current rates of interest. The down payment can go as low as three percent while the closing costs could be packaged in the mortgage.
- VA mortgage loans
VA loans are guaranteed by the Department of Veterans Affairs. Veterens and service people are eligible for a VA loan, which usually offers a competitive interest rate, no down payment, and reduced closing costs. While it's true that the mortgages aren't actually provided by the VA, the office certifies applicants by issuing eligibility certificates.
- Piggy-back loans
A piggy-back loan is a second mortgage that closes at the same time as the first. Usually the piggyback loan takes care of 10 percent of the purchase price, while the first mortgage finances 80 percent. Instead of the usual 20 percent down payment, the buyer just has to cover the remaining 10 percent.
- Carry-Back loans
In a "carry back" situation, the seller agrees to loan you some of his own equity to help you get your down payment funds. The buyer finances most of the purchase price with a traditional mortgage program and borrows the remaining funds from the seller. Typically you will pay a slightly higher interest rate with the loan financed by the seller.
No matter how you gather your down payment money, the thrill of reaching the goal of living in your own home will be just as great!
Need to talk about down payments? Give us a call at (325) 651-2100.