Putting Together Your Down Payment
Lots of buyers qualify for various loan programs, but they don't have a lot of money to put up the standard down payment. Below are a few straightforward ways to get together a down payment
Tighten your belt and save. Scrutinize your budget to uncover ways you can cut expenses to save for your down payment. You may also decide to enroll in an automatic savings plan to automatically have a specific amount from your paycheck deposited into your savings account. Some practical ways to put together funds include moving into housing that is less expensive, 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. You can also get serious about the possessions you really need and the things you can sell. A closetful of small items could add up to a nice sum at a garage or tag sale. Also, you can look into selling any investments you own.
Borrow funds from your retirement plan. Investigate the parameters of your particular plan. You can borrow money from a 401(k) for you down payment or perform a withdrawal from an Individual Retirement Account. Make sure you are clear about any penalties, the way this may affect on income taxes, and repayment obligation.
Ask for help from family members. Many homebuyers are often lucky enough to receive down payment help from giving parents and other family members who are willing to help them get into their first home. Your family members may be inclined to help you reach the milestone of owning your own home.
Learn about housing finance agencies. Special loan programs are provided to buyers in specific situations, like low income purchasers or people planning to renovating homes in a particular part of town, among others. Financing through a housing finance agency, you can get an interest rate that is below market, down payment assistance and other perks. Housing finance agencies may assist eligible homebuyers with a lower rate of interest, help with your down payment, and provide other advantages. These non-profit agencies exist to build up home ownership in particular areas.
Explore no-down and low-down mortgages.
- Federal Housing Administration (FHA) mortgages
The Federal Housing Administration (FHA), which functions as part of the U.S. Department of Housing and Urban Development (HUD), plays a significant part in helping low to moderate-income families get mortgages. An office of the United States Department of Housing and Urban Development(HUD), FHA (Federal Housing Administration) assists homebuyers who need to get mortgage loans.
FHA aids first-time buyers and others who may not be able to qualify for a typical mortgage by themselves, by offering mortgage insurance to lenders.
Down payment requirements for FHA loans are lower than those with traditional mortgage loans, even though these loans have average interest rates. The required down payment can go as low as 3 percent while the closing costs can be covered by the mortgage loan.
- VA loans
VA loans are backed by the U.S. Department of Veterans Affairs. Service persons and veterans can get a VA loan, which usually offers a competitive interest rate, no down payment, and limited closing costs. Although the VA doesn't finance the loans, it does issue a certificate of eligibility to qualify for a VA mortgage.
- Piggy-back loans
You can fund a down payment through a second mortgage that closes at the same time as the first. Most of the time, the first mortgage is for 80% of the cost of the home and the "piggyback" is for 10%. The homebuyer pays the remaining 10%, instead of putting the usual 20% down payment.
- Carry-Back loans
In a "carry back" situation, the seller agrees to lend you a portion of his home equity to help you get your down payment funds. In this scenario, you would borrow the majority of the purchase price from a traditional mortgage lender and finance the remainder with the seller. Often, this type of second mortgage will have a higher rate of interest.
No matter your strategy of getting together your down payment funds, the satisfaction of reaching the goal of owning your own home will be just as great!
Need to talk about down payment options? Call us at (407) 898-7559.
Do you have a question regarding a mortgage program?